december 7, 2022
Arabica coffee futures were pressured by spec and commercial selling on Wednesday as the recent rains and good prospects of rainfall in Brazil are supporting the development of a good crop. The breaking of the recent area of consolidation also triggered long program / algo liquidation. During the last three sessions, prices had consolidated between 161.70 and 166.55, attracting long players. The reference contract for March delivery settled 330 points lower at 160.20 cents a pound. Volume increased to 34,262 lots, including 6,572 switches. The forward curve continued to gain contango on the back months while the front remained flatter reflecting the possible supply tightens. Arabica certs increased by 10,242 bags to 658,890 bags. Pending grading 404,597 bags. Grading today: 18,358; passed 10,277; failed 8,081.
Robusta MAR23 contract settled at $1868 -9 with a 1887/1863 range. The main talking point in Robusta is around the JAN/MAR spread, stocks drawing down and tightness in the JAN the spread traded 42/52 range settling at +50 on 5,000 lots. This is exacerbated by a majority of the origin selling coming on the MAR23 contract. With still a large OI on the JAN23 plenty of shorts will still need to roll the position over the coming weeks. Expectation is this spread could get a lot firmer. Jan23 1950 call traded 500x LIVE @ 20.
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