Evening Coffee by Societe Generale
After falling to a forty-five day low early in the active trading period, New York coffee rallied 2¼¢ over the next two hours as the Brazilian real traded to a thirteen-month high. We retraced most of that gain, eventually closed near the middle of the day's range. Spreading was again active ahead of first notice day for Sep16 (August 23rd) and will likely remain active after tomorrow's expiration of the Sep16 option series (there were 11,686 in-the-money calls and 5,797 in-the-money puts open coming into today). The spot spread usually widens until the day or so before first notice day.
Resistance should be found near middle of yesterday's active range - 140.10¢ in Sep16 New York. Daily downtrend from July 15th at 141.79¢. Today's action describes a possible ‘hammer’ in candlestick jargon. A close tomorrow above today's high (138.80¢ in Sep16) would hammer out a short-term buy signal. A close below today's low would signal a resumption of the recent downtrend.
September New York (KCEU6) settled just above its midpoint (51%), down ninety-five cents. Volume was ninety-two percent above average at an estimated 78,389 lots including an estimated 781 EFP's, 3,720 TAS and 33,227 spreads (1,674 TAS spreads). 12,643 calls and 3,956 puts also traded. The KCEU6-LRCU6 arbitrage: 57.32+0.45¢. Ratio: 1.6989. €: $1.1141-0.3%. BRL: 3.1389/$-0.3%. CRB: +1.4%. Crude oil: +4½%. S&P500:+½%. Open interest: 185,308+517 (50-day stochastic: 54%; 125-day: 51%).
September London (LRCU6) settled in its lower half (43%), down ten dollars . Volume was thirty-one percent below average at an estimated 18,467 lots including 6,944 spreads and 526 EFP's. 3,225 calls and 1,685 puts also traded. Open interest: 107,867-758 (50-day stochastic: 90%; 125-day: 24%).
Brazil exported 1,908,808 60-kg bags of coffee in July, the Brazilian Coffee Exporters' Council (Cecafé) estimates, down 33.5% from 2,869,730 bags in July 2015. Arábica shipments were down 26.2% to 1,573,465 bags, conillon down 90.8% to 37,359 bags, soluble coffee down 10.2% to 295,314 and roasted coffee down 22.8% to 2,670 bags. 12-month total exports were down 5.1% to 34.538 mln bags from 36.406 million one year earlier.
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