Commentary for July 22

ICE Coffee Futures close 460 points lower on speculative liquidation

 

Ice Arabica futures drifted lower today  as a result of speculative profit taking following Friday’s rally. Despite the 170-168 level providing good support for the market throughout yesterday’s session, the market failed to hold that level today, with speculative liquidation sending the market tumbling down to test the 165.00 level, where it met some industry buying. Traded volume was 18,148 lots and open interest was down 213 contracts as of July 21st.                  

 

In other news, The Tanzania Coffee Board announced that the country’s coffee production for 2014-2015 is expected to rise 26.7% to 1.030 million bags. The sharp increase is attributed to the biennial cycle and an “on-year” for coffee production.

 

London - 91 lots were graded this morning with the working exposure in July still holding above 2,000 lots entering today down only 9 lots from yesterday. The overall exposure reflects new involvement down the board to increase the open position to 97,422 lots. Prices again showed little interest into positive numbers before edging lower in light turnover. Business in the switch market increased but showed little change in value with the arbitrage holding above the 80 cent premium during the morning before weakening into the second part of the day driven by “C” Contract weakness.

London lost traction triggering intraday selling which was enough to elect stops below 2000 into the afternoon. Volume was better in the leg lower but overall activity still lacking. As the market organises for the expiry of July at the end of next week the focus begins to build on the September exposure. The compilation of the 55,000 lots open in September does carry a mixture of longs from arbitrage/spec/Index and still has a decent volume of unfixed origin interest with the short made up of primarily hedges.

Prices held the 1980 marker in September but was not able to re-establish the upside formation. This was an important move suggestion a downside washout into the balance of the week!