Evening Coffee by Societe Generale
New York coffee rallied steadily through the first hour of active trading, trading to within thirty points of a three-week high, then fell sharply under the pressure of a strong U.S. dollar, over four cents from the high. We bounced back a bit at the end, but still closed well off the highs (a bearish long upper shadow) and below yesterday's high.
The U.S. dollar rallied after Fed chair Yellen said that arguments for a second increase in short-term interest rates have strengthened amid firm jobs growth in the U.S.
December New York (KCEZ6) settled in its lower half (37%), up forty points. Volume was thirty-one percent below average at an estimated 27,567 lots including an estimated 722 EFP's, 1,739 EFS's (1,733 Dec16), 123 TAS and 3,660 spreads. 3,285 calls and 3,971 puts also traded. The KCEZ6-LRCF6 arbitrage: 60.88¢-0.02¢. Ratio: 1.7302-0.0071. €: $1.1207-0.7%. BRL: 3.2616/$-0.8%. CRB: -0.1%. Crude oil: +½%. S&P500:-0.7%. Open interest: 163,594+168 (50-day stochastic: +0.7%; 125-day: +½%).
November London (LRCX6) settled three-quarters to its high (75%), up $22 dollars. Volume was eleven percent above average at an estimated 16,849 lots including 6,134 spreads and 547 EFP's. 225 calls and 385 puts also traded. Open interest: 109,967-465 (50-day stochastic: 76%; 125-day: 29%).
Vietnam will export 140,000 tonnes of coffee in August, the General Statistics Office estimates, up 51% from 93,000 tonnes last August. Jan-Aug exports are up 39% year-on-year to 1.26 mln tonnes.
El Salvador exported 55,438 60-kg bags of coffee in July, the Salvadoran Coffee Council reports, up 70½% from 32,512 bags in July 2015. Oct-Jul shipments were down 28% from one year earlier to 413,959 bags from 571,803.
CFTC reports that large hedgers were net sellers of 3,502 lots of Coffee "C" in the week ending August 23rd increasing their net short position to 69,142 lots. Large speculators increased their net long position by 3,403 lots to 27,832. Index traders bought 1,343 lots (long 36,083). Small traders sold 1,245 lots (long 5,226).
The London coffee market will be closed on Monday, August 29th for the Summer Bank Holiday. The New York market will open 3¼ hours later than usual, at 7:30 am ET. Rodrigo and I will in the office.
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