ICE Coffee Futures Close Lower on Switch Action by FC Stone

“C” futures remained under selling pressure today as switch activity in the nearby Dec-March spread and the looming December options expiration dominated the market action.  The spot December contract settled 145 points lower at 116.30 cents per pound after reaching a low of 115.75 cents per pound. The focus remains on the switch, with over 22,000 Dec-March spreads including nearly 2,000 Dec-March TAS (Trade –At-Settlement) indicating that index funds traders are actively engaged in roll their positions forward.  Total volume reached 71,286 lots today.  The March delivery contract closed 165 points lower at 119.70 cents per pound. Open interest figures show that as of yesterday, March-delivery  is  now  the  most  active  contract,  with  its  open  interest  increasing  by  3,895  lots  to  67,993  open  positions. December now holds only 64,564 open positions, a decrease of 8,703 lots during yesterday’s trading session. Total open interest decreased by 3,499 lots, reaching 198,085. December options expiration is around the corner on November 12th. Nearby Open interest for Calls is concentrated in the 120, 125 and 130 strikes, respectively.  On the other side of the board, we see open interest concentrated on the 110 strike Puts at 3,630 open lots, followed by the 120.00 and 115.00 at 3,297 and 2,884, respectively. In weather news,  coffee regions in Brazil saw good rains yesterday, with the Mogiana region, Parana, and Varginha region in south  Minas  Gerais  all  getting  over  30  mm  of  rain  according  to  SOMAR.  The  newest  report  from  the  Australian  Bureau  of Meteorology noted that it has now been six months since the 2015 El Niño was established in the Pacific, suggesting that El Niño sea temperatures will peak before the end of the year. On other news, CECAFE reported exports of 2.93 million bags of green coffee  from  Brazil  during  the  month  of  October,  5.2%  lower  than  last  year’s  October  exports.  Robusta  green  coffee  exports increased 28% while Arabica decreased 8.5% compared to last year.