Evening Coffee by Societe Generale

New York coffee futures gapped down for the second consecutive day then continued steadily lower throughout the active trading period, cutting through support levels like a hot knife through butter. Selling was again mostly speculative, intensified by continued dollar strength, encouraged by similar weakness across the commodity spectrum. The dollar has eased off to near unchanged after the market's close. The S&P 500 has rallied from the seven+ week low to trade only marginally lower.
     75% retracement of the move from the May 4th low (118.90¢) to the May 17th high (135.30¢) is at 123.00¢ in Jul16 KC tomorrow. Resistance around 126.45¢. Daily uptrend from March 25th at $1627 in Jul16 RC.
    July New York (KCEN6) settled one-quarter cent from its low (5%), down 6.15¢
50.43¢(-4.7%). Volume was thirty-five percent above average at an estimated 54,100 lots including an estimated 888 EFP's, 77 EFS's, 724 TAS and 17,239 spreads. 6,430 calls and 5,554 puts also traded. The KCEN6-LRCN6 arbitrage: 50.43¢. Ratio: 1.6787. €: $1.1202-0.1%. BRL: 3.5651/$ unchanged. CRB: -0.8%. Crude oil: +½%. S&P500:-0.3%. Open interest: 186,537-947 (50-day stochastic: 37%; 125-day: 53%).
     Fourteen notices were issued bringing the total for the completed delivery period to 1,332 lots.
     July London (LRCN6) settled near its low (10%), down thirty-one dollars. Volume was eleven percent below average at an estimated 15,580 lots including 3,917 spreads and 1,113 EFP's. 4,160 calls and 953 puts also traded. Open interest: 109,404+60 (50-day stochastic: 14%; 125-day: 12%). No tenders were posted.
     Brazil will produce 55.950 mln 60-kg bags of coffee in 2016/2017, USDA's Foreign Agriculture Service attaché estimates, up from 49.400 mln bags in 2015/2016 and 54.300 mln bags in 2014/2015. Exports are expected to rise in 2016/2017 to 35.230 mln bags from 33.330 mln in 2015/2016. 2014/2015 exports they put at 36.570 mln bags.
John Bernardi