Evening Coffee by Societe Generale

     Coffee futures soared today on aggressive speculative buying spurred by a ICO report of a sharp decrease in world coffee exports in July. Large buy stops were triggered above the high of August 24th - we had been stuck in that day's range for the following five days. We traded to a 1½-month high, eliciting heavy selling from Central and South Americas.
    December New York (KCEZ6) settled in its top quarter (76%), up 4.35¢. Volume was fourteen percent above average at an estimated 44,388 lots including an estimated 959 EFP's, 47 EFS's, 379 TAS and 9,779 spreads. 6,200 calls and 5,671 puts also traded. The KCEZ6-LRCF6 arbitrage: 67.90¢+5.08¢. Ratio: 1.8009+0.511. €: $1.1201+0.4%. BRL: 3.2445/$-0.6%. CRB: -1.1%. Crude oil: -3.5%. S&P500:-0.2%. Open interest: 168,824+2,783 (50-day stochastic: 89%; 125-day: 85%).
     November London (LRCX6) settled in its top quarter as well (82%), up twenty-four dollars. Volume was twenty-one percent above average at an estimated 18,617 lots including 4,373 spreads and 1,543 EFP's. 362 calls and 2,635 puts also traded. Open interest: 102,831-10,713 (down 12,466 in Sep16) (50-day stochastic: 90%; 125-day: 72%).
     The International Coffee Organization reports that world coffee exports totaled 7.747 mln 60-kg bags in July, down 22.0% from 9.934 mln bags in July 2015 (Colombian milds fell 55.0% to 571,000 bags, Brazilian naturals fell 20.8% to 2.111 mln bags). 10-month total exports were down 1.7% from the same period one year earlier to 93.275 mln bags from 94.849 mln.
     Honduran August coffee shipments were up over 86% year-on-year to 276,811 60-kg bags from 148,655. The 11-month total was up just under ½% to 5.003 mln bags from 4.978 mln.
     Exports from Indonesia's Sumatra island were down near 46% in August to 24,323.2 tonnes from 44,702.8 tonnes last August. 11-month shipments were over 60% lower than one year earlier at 86,749.48 tonnes from 218,623.10.
John Bernardi