Evening Coffee by Societe Generale - Nov 2'17

On the wake of the new month, London market did not find any reasons to look north and spec pressure continued to punish the flat price. The first thirty minutes of trading set the stage for the fall of robusta, it tumbled below yesterday’s lows and the inability to find buying interest only added to the dire picture. The active trading period brought another round of selling which the market was unable to absorb. Robusta moved on a down spiral path ending half an hour before the close  at a new low in more than a year, 1830 vs January. The Nov/Jan spread spiked on the day moving to $59 premium while Jan/Mch was contained within previous two days’ range 14-26 premium. Option trading was active with F18 1900/2050 CS vs 1846Δ24 trading 2350 times @ 29. On first notice day for the November robusta coffee contract 3,351 lots were tendered to the market with ABN Amro being the main contributor and benefactor.
   On arabica, it is the last straw that breaks the camel’s back, and so it did. Unable to gather interest to push higher in the last 2 sessions, New York followed the faith of its cousin tumbling lower on the day. The second position reached the 126.60 low area dating back to August and after bouncing from it 5 times during October we finally broke on system’s trading technical signals. Interest from natural buyers is not present at least not in any form to absorb the running of the bulls we suffered today as previous buyers turned into sellers. The spread position certainly added to today’s big volume with Dec/Mch adding about 10,000 and Mch/May about 7,000 lots. Only the later weakening on the process. Options were not behind on activity as the Z17 120P traded 2,376 lots and the Z17 127.5 C traded 2,187 lots. Certainly the 125.00 area has been pivotal place in the past. Holding the area should give us room to move forward otherwise, the 76.4% Fibonacci retracement from the low of June is 2 cents away.
     LRCF8 settled $40 lower with volume estimated at 26,208 lots, including 7,433 spreads, 817 EFP's and 0 EFS's. 6,221 calls and 2,100 puts also traded. Open interest 102,844+2,562.
     KCEZ7 settled -2.15 cents lower with volume estimated at 81,168 lots, including 32,068 spreads, 1,258 EFP's, 106 EFS's and 1,262 TAS. 7,247 calls, 6,075 puts also traded. €=$1.1634. BRL: 3.2727/$. CRB: 1.8755. Crude oil 54.64. S&P500 2576. Open interest 239,067-48.