Evening Coffee by Societe Generale

 
    Stock markets in Europe fell after investors digested the FOMC “less dovish” statement and investors await for bank stress-test results this Friday. In the US equity indices were able to hold on mixed earnings also waiting for second quarter GDP data to be released tomorrow.
    The Dollar Index remained under pressure a day after the FED repeated most of its words making investors bet on a single hike this year probably after elections, or more precisely a the December meeting.
     Coffee markets are trading very low volumes, with the spread activity picking up, especially on the widening U6/Z6 that traded at -3.20 cts today. September16 contract in New York broke yesterday’s low recovering in the last three hours of the session to close near the high of the day. Robusta traded in a tight 18 dollar range settling exactly at the middle of it.
     September New York (KCEU6) settled US$ 0.95 cents up. Volume was below average at 20,396 lots including an estimated 769 EFP's, 0 EFS's, 614 TAS and 5,036 spreads. 2,295 calls and 2,261 puts also traded. The KCEU6-LRCU6 arbitrage: 58.41cts +0.19cts Ratio: 1.7103-0.0012. €: 1.1077+0.17%. BRL: 3.2960/$-1.03%. CRB: -0.22%. Crude oil: -2.00%. Open interest: 184,240-373.
     September London (LRCU6) settled up 9 dollars today. Volume was below average at an estimated 7,915 lots including 1,985 spreads, 608 EFP's and no EFS's. 4,100 calls and 960 puts also traded. Open interest: 104,284-433.
     WTI continued falling after yesterday DOE data and is now at shooting distance of the 40.00 a barrel. Commodity indices slid led by the 5.27% drop of the Orange Juice contract followed by Lean Hogs and energy raw materials.
     On coffee, Safras and Mercados says that 70% of the 54.9 mln bags Brazilian crop has been harvested, a little less than the five year average of 71% but higher than last year’s 66%.
     The European Coffee Federation informed that inventories at in European ports stood at 12,078 mln bags at the end of May, or 298,200 bags more than the month before. In May 2015 there were 12,050 mln bags of stocks in the region.
     The “C” is drawing a head-and-shoulders formation, so far consolidating on the right shoulder of the pattern. A downtrend line from the highs of July 15th and the 21st has a resistance at 142.20 tomorrow, which if broken will make 143.65 and 145.45 as the next upside objectives. Support levels are at 140.40, 139.05 and 137.15
     Have a good night and good trades tomorrow,
     Rodrigo Costa