Evening Coffee by Societe Generale
After taking out yesterday's high a few minutes before the start of active trading, New York coffee fell sharply the rest of the session, bottoming out nearly five cents from the high about twenty minutes before we closed. The New York - London arbitrage closed at its lowest level in over three months. We settled just one-quarter cent off the seven-week low. The move was counter to that of most commodities - the Reuter/Jefferies CRB Index traded to its highest level since early December. The U.S. dollar was down modestly.
Key support is at the April 8 low of 121.10¢ in Jul15, then at the life-of-contract low of 115.35¢. Selling should be found around midway between yesterday's opening and closing levels - 123.70¢.
July New York (KCEN6) settled near its low (4%), down 4¼¢. Volume was thirteen percent below average at an estimated 38,395 lots including an estimated 478 EFP's, 535 TAS and 9,420 spreads. 6,243 calls and 3,593 puts also traded. The KCEN6-LRCN6 arbitrage: 50.57¢. Ratio: 1.7088. €: $1.1317+0.2%. BRL: 35179/$+0.3%. CRB: +0.6%. Crude oil: +1.6%. S&P500:+0.3%. Open interest: 178,924-1,495 (50-day stochastic: 0%; 125-day: 35%). The were no notices issued.
July London (LRCN6) settled four-fifths to its low (20%), down sixteen dollars. Volume was fifteen percent above average at an estimated 20,758 lots including 7,210 spreads and 951 EFP's. 3,345 calls and 2,095 puts also traded. Open interest: 112,911+4,041 (50-day stochastic: 16%; 125-day: 18%).
Hot, dry weather in Sao Paulo and Minas Gerais depletes soil moisture and increases stress to developing coffee. Some scattered showers and cooler temperatures are occurring at this time easing stress.
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