Commentary for July 29, 2013

ICE Coffee Futures Close   Modestly Lower
  

Arabica coffee futures closed   lower Monday on a session dominated by spreads trading.  The active
contract for  September delivery fell 110 points to settle at 121.15 cents a  pound.  With lack  of news and external factors that could influence on the  prices, the activity  was mainly generated by short term specs. Weakness of the  real also pressured  the prices. The real weakened ahead of monetary-policy  meetings in US and the  European central bank. The real finished at BRL2.2666  from BRL2.2501 last  Friday. The Commitments of Traders Report on Friday showed  that non-commercial  reduced the net short position to 23,009 lots as of July
23.  The commercials  increased to a net short of 35,023 lots.  In  other news, farmers in Colombia  sued the government demanding from the  government to end the prohibition to grow  low quality coffees and to restrict
the import of coffees of low quality.     

 
London was  slow  to get operational this morning with the board uncovering price fix buying   support into the opening sequence. Selling was mixed but origin involvement was   extremely light. The market is continuing to talk about reducing certified   stocks and relatively high physical differentials as the driving fact behind
the  Bullish undertone of the market. The September still held its premium  around $6  throughout the morning with the flat price action consolidating above  1900. COT  numbers for London did not yield any surprises with the Managed Money  short  being reduced taking the net working position down to just 265 lots, with  the  Commercial exposure continuing to release longs resulting in the net  position  down to 4,651 long. Over the week the board was down $15 with the open  position  cut back by 1,492 lots which linked well with the exit of positions.  Robusta  exploited weakness into the second part of the day with prices testing  down to  the 1880 pivot level in September which remains an important marker for  any  downside action. Prices lifted quickly with buying building in beneath the   action helping the reaction from the lows. Structure recorded little change
with  the September premium holding as the market focused on addressing exposure   before month end on Wednesday. The board held the important levels despite the   setback today which maintains the focus on the upside for the   moment.