Evening Coffee by Societe Generale

     Equity indices had a mixed session with European stocks ending slightly higher and the US ones a tad lower during most of the day until the S&P500 and the Dow Jones erased the early losses by mid-day. The FOMC started today its two-day meeting with market participants expecting no change on policy. Tomorrow words of the committee will be closely scrutinized by the market to find hints on how close a rate hike is likely to take place. New Home Sales in July rose the most in eight years, according to Bloomberg, one additional strong indicator of the American economy that could make the FED less dovish.
     The Dollar Index recovered from lower levels traded before 6am in New York, settling virtually unchanged.
     Arabica coffee broke yesterday’s high before US traders arrived in the office, losing its gains to hover 0.70 cts up and down around Monday’s close in the last 3 and ½ hours. Robusta moved up in the last thirty minutes of the session to finish near its highs.
     September New York (KCEU6) settled US$ 0.50 cents up. Volume was below average at 20,804 lots including an estimated 677 EFP's, 33 EFS's, 832 TAS and 5,019 spreads. 1,805 calls and 1,925 puts also traded. The KCEU6-LRCU6 arbitrage: 59.10cts -0.23cts Ratio: 1.7195-0.0130. €: 1.0988-0.07%. BRL: 3.2722/$+0.41%. CRB: -0.05%. Crude oil: -0.74%. Open interest: 184,661+1,209.
     September London (LRCU6) settled up 25 dollars today. Volume was below average at an estimated 9,500 lots including 2,219 spreads, 497 EFP's and no EFS's. 635 calls and 497 puts also traded. Open interest: 105,922+35.
     Brazilian port workers called for a 24-hour strike starting tomorrow at 7am local time, according to Reuters, unlikely to have any impact on commodity prices if it is just a one-day “protest”.
     CONAB said it will auction 67,000 bags of coffee from the government stocks this coming Friday, as the internal prices are above the triggered level of R$ 401.39 a bag. The demand from local industry remains high due to a lower conilon crop, sustaining low grade beans at a relative short distance from good-cup qualities.
     Technically New York is consolidating with stops likely to be found below 139.90 tomorrow, and above 144.30.
    Have a good night and good trades tomorrow,
    Rodrigo Costa