Evening Coffee by Societe Generale - Oct 18 /17

Markets showed another day of consolidation as ideas about the condition of Brazil’s 18/19 crop are still far apart from each other. There is the camp which believes that the crop is healthy enough to produce a “monster crop” while the opposite opinion is also on the table. The market, already oblivious to the chatter at least in the short term, did not move far away from yesterday’s low levels.
    Speculative short selling was still adding pressure to the terminal markets, but since the levels trading are as low as we have seen since June2016 (without counting the drop from June17) in arabica and since September 2016 in robusta, hedgers seem comfortable adding cover. Structure activity added considerable volume to London while trading up to +40 on the front month position. New York’s spread on the other hand traded in a 1-tick range at the bottom of its range. OI explosion in arabica adds to the equation perhaps giving a line to the bulls in the event of a weather mishap, which can cause a considerable short covering rally.
   LRCX7 settled $7 lower with volume estimated at 23,363 lots, including 11,066 spreads, 508 EFP's and 0 EFS's. 2,640 calls and 1,286 puts also traded. Open interest 97,671 -2,145.
     KCEZ7 settled 0.40 cents higher with volume estimated at 27,902 lots, including 7,678 spreads, 807 EFP's, 97 EFS's and 582 TAS. 4,170 calls, 5,243 puts also traded. €=$1.1766. BRL: 3.1711/$. CRB: 1.8462. Crude oil 51.92. S&P500 2553.75. Open interest 226,320+3,316.