ICE Coffee Futures Consolidate Lower

Arabica coffee futures continued their lower trend falling 260 points this Wednesday closing at 129.40 cents per pound. Volume was impressive with 44,780 lots traded and including 10,148 switches representing more than 40% of the total volume. The active July-September switch widened 15 points to end -2.80 cents reflecting the roll of the positions. New York coffee traded in a range of 345 points, reaching a high at 132.70 and a low at 129.25. Technically NY coffee futures have been trading during the last month in a range between 126/146 base U15 which are very strong supports and resistance levels respectively. In related news, Ecom raised Brazil Coffee crop estimate after favorable rains. A report from Bloomberg indicated that in 2015 Brazilian farmers will collect 51.8m bags, that compares with a March estimate of 49.75m bags
London Market - Activity followed the same pattern as yesterday with focus on the 1800 option strike in July before it expired at lunch time with the reference price going out at 1785 after trading to a high of 1812 for the morning. Structure continued to widen breaking to new highs as the market continued to feed on the short covering in the July. Once more movements in the spot month exposure down only 2,440 lots after the business yesterday triggered the activity. This still leaves an open position of over 40,000 lots into today’s session which drove the action. Having reacted lower after the option expiry prices quickly got bid higher as the July premium traded to a fresh high and the flat price action tested back into the resting origin selling. Volume was heavy in the spot positions with consistent crosses boosting turnover as the market struggled to address the short book and prices adapted into the 1800 area with the July/ Sept having traded in a range +2/+62 towards 4,500 lots on the day and another 1,500 July/Nov. Attention intensified on the Sept/ Nov as the discount traded into -12 once again. Another interesting development on the day was the arbitrage which narrowed top below 45 cents in July as New York struggles with spot month longs and London battles with shorts!