Evening Coffee by Societe Generale

New York coffee spiked higher on the opening, stops triggered above yesterday's high and above a daily downtrend line dating back to July 15th. We pulled back 2½¢ into the opening of active trading, went sideways for the next two hours, then took aim at the early highs. With most of the trading world now, in fact, awake, that attempt fell thirty points short and we fell back into the close to retrace just over half of the rally. We closed precisely where we opened - a doji in candlestick jargon, indicating a state of transition. A close above today's high, however, should be considered as very positive especially as it would also confirm the break of the July 15th downtrend.
    December New York (KCEZ6) settled in its lower half (45%), up fifteen points. Volume was one percent above average at an estimated 41,191 lots including an estimated 445 EFP's, 143 EFS's, 1,131 TAS and 15,762 spreads. 2,525 calls and 1,694 puts also traded. The KCEZ6-LRCX6 arbitrage: 59.33¢+0.65¢. Ratio: 1.7199+0.0102. €: $1.1322-0.3%. BRL: 3.2161/$+0.7%. CRB: -0.3%. Crude oil: +0.1%. S&P500:-0.1%. Open interest: 166,358-1,673 (50-day stochastic: 0%; 125-day: 0%). Tuesday is first notice day for Sep16 New York coffee.
     November London (LRCX6) settled two-thirds to its low (33%), down six dollars. Volume was sixty-three percent above average at an estimated 24,394 lots including 10,180 spreads and 1,647 EFP's. 390 calls and 515 puts also traded. Open interest: 114,175+1,154 (50-day stochastic: 100%; 125-day: 38%).
     Much cooler air spreading across southern coffee production areas of Brazil well be preceded by significant rainfall in Parana and southwestern São Paulo. Some flowering can be expected in minor growing areas. Cooling that follows early next week may bring temperatures close to the frost threshold in traditionally cooler areas but no damaging cold is expected.
     CFTC reports that large speculators were net sellers of 5,270 lots of Coffee “C” in the week ending August 16th leaving them with a net long position of 24,428 lots. Large hedgers were the biggest buyers with 4,614 lots cutting their net short position to 65,640, Index traders bought 1,440 lots (long 34,740). Small traders sold 784 lots (long 6,472).
John Bernardi