Evening Coffee by Societe Generale

New York coffee took out yesterday's high on the opening, buoyed by continued weakness in the U.S. dollar. We spiked to 130¢ towards the end of the first hour of active trading (8:00-9:00 am NY time), then fell off nearly four cents from the high over the next two-and-one-half hours. Stops triggered below opening lows took us to within one tick of a nine-day low. The rest of the day was spent in a small range off the low in spread-dominated action.
     Early buying was likely from those who mistakenly identified yesterday's action as a reversal. Technically weak action in finishing lower (a nine-day low close) after at first trading to a three-day high.
     May New York (KCEK6) settled towards its low (21%), down forty-five points. Volume was thirty-nine percent above average at an estimated 53,839 lots including an estimated 1,407 EFP's, 1,705 EFS's (1,600 in Sep16), 506 TAS and 20,244 spreads. 3,946 calls and 3,434 puts also traded. The KCEK6-LRCK6 arbitrage: 58.60¢. Ratio: 1.8591. €: $1.1337+0.4%. BRL: 3.6212/$½%. CRB: -0.2%. Crude oil: -0.3%. S&P500:+0.4%. Open interest: 198,274-547 (50-day stochastic: 71%; 125-day: 82%).
     May London (LRCK6) settled in its lower half (35%), up eight dollars. Volume was eleven percent above average at an estimated 17,565 lots including 6,026 spreads and 1,104 EFP's. 2,478 calls and 520 puts also traded. Open interest: 121,433-1,725 (50-day stochastic: 0%; 125-day: 42%). Three retenders were posted.
     Conab, Brazil's crop supply agency at the Agriculture Ministry, will offer 120,000 60-kg bags of arábica coffee at auction tomorrow. Recent such auctions have been largely ignored.
     Showers becoming widespread in Colombia, models showing a much wetter trend in the next two weeks, from 120 mm to 160 mm of rain expected. - Speedwell Weather
     Not much significant precipitation is expected in either Brazil or Vietnam coffee country during the next week to ten days. - World Weather, Inc.
John Bernardi