Commentary for March 5th (by fc stone)

ICE Coffee Spikes On Spec Buying

 

Arabica coffee futures traded with marked volatility again, dipping lower in the morning before taking off to new highs. The active contract for May delivery worked in 2000+ point range, settling at 202.40 cents a pound after rocketing from firm nearby support at 181.65 to close 1,695 points over. Past resistance above 181.00 basis May has become the technical level for support, with speculators taking new forecasts of reduced and damaged output in Brazil as a sign to put in new buys after the market reached 400 points lower. The rally gained further traction when yesterday’s highs of 197.80 were breached. Wolthers-Douque published a revised estimate for Brazilian production, dropping expectations from 53 million bags to 47.7 million and forecasting output for 2015 as low as 40 to 42 million bags.

 

London: Yesterday’s simultaneous settlement on the lows in both markets was the first of its kind since early February and there was plenty of followthrough selling in robusta ahead of the opening. The board did indeed gap down off of the opening bell before levels worked their way lower through the opening hours. Pace to the downside quickened as NY joined for the ‘full’ session, as did the volume which up until then had been wanting. Origin sellers, delta hedgers and liquidating longs kept the pressure on until just before mid-afternoon when the first real bids of the day started to be encountered. The rush to cover was brisk; resulting in a sharp rally, a closing of the opening gap and new highs on the day. For now at least, the trend remains your friend.