ICE Coffee Futures Decline Modestly

Arabica coffee futures declined Monday on speculative selling encouraged by weak technical performance and the bearish action of the commodity complex. The most active contract for September delivery finished 95 points lower at 127.45 cents a pound. The technical action triggered sales as the prices broke the recent lows at the 127.50 area for the September contract. Volume increased slightly to reach 19,024 lots, including 3,027 switches. The nearby September-December switch widened 10 points to end at -3.55 cents. A decrease of the net short fund position, according to Friday’s COT report, restored the spec’s enthusiasm to add shorts. In the weather front, Brazil, mostly dry during the weekend. Temperatures close to normal, with mostly favorable conditions. Colombia with some showers activity and favorable conditions. Mexico and Central America reported widely isolated rains but increasing in the next 5 to 10 days. In other markets, the gold fell to a five-year low on prospects for higher US interest rates. Crude oil drop below $50 per barrel, attracting more selling on potential of testing the low at $44 reached in March.
London Market - This morning’s Commitment of Traders Report seemed to adequately reflect the level of fund selling in the market last week with both the non-commercial short increasing and the long decreasing to make a combined net change in the fund position of over 4,400 lots. With the funds fully engaged in sell mode, one may have reasonably expected lower levels to start the week but by mid-session and with little to show in either direction the market suddenly surged $50 higher engaging market circuit breakers in the process. It is still unclear as to whether the move was prompted by a lack of follow through, a ‘fat finger’ error or the election of a large stop. What is clearer is that most traders saw the strength as a selling opportunity and despite holding well for about an hour or so, the board went into reverse to the end of the session with only the slimmest of gains.