Evening Coffee by Societe Generale
New York coffee gapped up today then continued strongly higher the next six hours, closing at the highest level since the first day of April. A four-and-one-half cent rally in the Brazilian real led to strong gains not only in coffee, but in soybeans, grains and bean products as well - both soybean oil and soybean meal touched their upside limits.
Jul16 NY broke a downtrend line dating back to March 23rd and closed above its 200-day moving average for the first time since April 20th. First resistance is at the top of window between the close of April 1st - 129.35¢ in Jul16, then 131.20¢.
After filling its upside gap yesterday, Jul16 London coffee rallied strongly today, closing at its highest level since mid-November.
July New York (KCEN6) settled in its upper quarter (79%), up 2.30¢. Volume was one percent below average at an estimated 41,029 lots including an estimated 668 EFP's, 155 EFS's, 1,257 TAS and 11,803 spreads. 4,869 calls and 9,409 puts also traded. The KCEN6-LRCN6 arbitrage: 53.40¢. Ratio: 1.7092. €: $1.1372-0.1%. BRL: 3.14721/$+1.3%. CRB: +1.6%. Crude oil: +3.4%. S&P500:+1.0%. Open interest: 192,029-2,203 (50-day stochastic: 63%; 125-day: 67%).
July London (LRCN6) settled in its upper quarter as well (79%), up twenty-five dollars. Volume was thirty-two percent below average at an estimated 12,599 lots including 2,982 spreads and 516 EFP's. 7,360 calls and 3,195 puts also traded. Open interest: 106,482+1,674 (50-day stochastic: 5%; 125-day: 4%). Eight retenders were posted.
Very little rain fell in Brazil's northern coffee areas over the past 24 hours. Most coffee areas will be dry during the weekend into early next week. An erratic rainfall pattern is expected in Vietnam's Central Highlands over the next week.
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