Evening Coffee by Societe Generale

The US Non-Manufacturing Composite Index in August at 51.4, below the expected 54.9, weighted on the US dollar sending the DXY down 1.08% - one day after the nonfarm payroll also disappointed (on the later though July revisions were above the original release). Equities remain treading water on a slow volatility environment with most specs betting on the upside for the S&P500. Implied chances of a rate hike by the FED on the September 21st meeting diminished to 23% from 36% a week ago.
      The majority of raw-materials that compound the CRB Index went up today led by Silver, Orange Juice, Cotton and Gold. NY Coffee was the fifth one closing 1.55% stronger after the long-weekend. Robusta prices on the board settled at new recent highs, with the second position at levels not seen since March 2015.Options’ activity were high today with 5000 lots of Mar17 2050/1800 fence trading at 16 debit for the call, 2000 lots of Jan17 C2000 and 1000 Jan17 P1750 – implied vols are at very low levels benefiting protection to be bought on both boards.
     December New York (KCEZ6) settled US$ 2.35 cents up. Volume was average at 26,834 lots including an estimated 1,042 EFP's, 76 EFS's, 541 TAS and 5,483 spreads. 4,192 calls and 3,371 puts also traded. The KCEZ6-LRCX6 arbitrage: 67.44cts Ratio: 1.7871-0.0094. €: 1.1250+0.92%. BRL: 3.2093/$+2.31%. CRB: +0.50%. Crude oil: +0.92%. Open interest: 174,022+1,243.
     November London (LRCX6) settled up 12 dollars today. Volume was average at an estimated 17,529 lots including 2,746 spreads, 586 EFP's and no EFS's. 7,008 calls and 8,100 puts also traded. Open interest: 104,796+544.
      IBGE revised its estimate for the 16/17 Brazilian crop to 47.8 mln bags, 2.05% below than its previous figure (48.8m), due to lower yield on the state of Bahia. According to the government statistic’s body the harvest shall be 39.8 mln bags of Arabica and 8 mln bags of Conilon.
     Colombia exported 1.25m bags in August, a 16% increase from the same month a year ago, according to FNC.
     The Japan Coffee Association informed that stocks in the country increased 0.9% in July to 3.57 mln 60kg bags – a year ago it was at 3.26 mln 60kg bags. The composition of inventories are: 1.60 mln bags of Brazil, 479k of Colombia, 107K bags of Indonesia, 616K of Central America and 774k bags of other origins.
     Robusta COT reported managed-money increasing their net long to 26,665 lots, 2,681 lots more than a week ago. Hedgers bought 2,336 contracts and sold 3,822 lots, being net sellers of 1,486 contracts at the week ending on August 30th. On the US CFTC report index funds adding 3,652 lots to their long caught the attention and looking into other commodities they were buyers in a few, like cotton, sugar, lean hogs and feeder cattle.
     The BRL gained 2.3% on the back of the US dollar fall, leaving the price of NY in cts of Real per pound at R$ 4.93 – virtually the same level as last Friday.
     Brazil is closed tomorrow to celebrate their Independence resuming regular market activity on Thursday.
      Have a good night and good trades tomorrow,
      Rodrigo Costa