Evening Coffee by Societe Generale
New York coffee opened at a three-day low on continued weakness in the Brazilian real. Finding support near the middle of last Friday's body (the range between the day's open and its close), we rallied steadily over the first 2-1/3rd hours of active trading fueled by stops at 2½-month highs. After retracing almost half that gain, we rallied again, taking out the early high by nearly two cents reaching the highest level seen since early December. We closed above a daily downtrend line dating back to 6-April-2015 and above the 200-day moving average for the first time since 1-Dec-2014.
The London market fell below a short-term uptrend line dating back to the life-of-contract lows but managed to close back above it.
The Brazilian real fell another eight-and-one-half cents against the dollar (at its low) after news that Brazil's former leader, Luiz Inacio "Lula" da Silva will become President Dilma Rousseff's chief of staff, but has since recovered to trade nearly one cent higher.
May New York (KCEK6) settled near its high (84%), up 3.35¢. Volume was thirty-six percent above average at an estimated 47,382 lots including an estimated 1,339 EFP's, 488 EFS's, 493 TAS and 14,795 spreads. 6,403 calls and 4,010 puts also traded. The KCEK6-LRCK6 arbitrage: 64.37¢. Ratio: 1.9951. €: $1.1195+0.8%. BRL: 3.7629/$0.1%. CRB: +1.6%. Crude oil: +4.7%. S&P500:+0.6%. Open interest: 190,078-1,288 (50-day stochastic: 54%; 125-day: 62%). Four deliverable notices were issued against Mar16.
May London (LRCK6) settled in its upper half (63%), up three dollars. Volume was eight percent above average at an estimated 16,417 lots including 5,168 spreads and 804 EFP's. 658 calls and 1,550 puts also traded. Open interest: 132,065-895 (50-day stochastic: 50%; 125-day: 71%). No tenders were posted.
Very little rain was of significance was noted in Brazil coffee production areas Tuesday and similar conditions are expected over the next seven days.
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