ICE Coffee Futures Plunge 4.6 Percent on Weather News

​Arabica coffee futures plunged Friday as weather analysts in Brazil are now seeing good rains after the October 22-26 period. The most active contract for December delivery, lost 785 points to settle at 125.85 cents a pound. The bearish sentiment was set last night, after the GCA stocks report for September, showing a decrease of 6,055 bags only, was published. The GCA stocks usually decline a greater amount during the September month. In related news, Colombia announced this morning, that they will now allow the exports of low grade coffees or the called “Pasillas” beans. The measure will increase the offer to compete with other milds. The Brazilian real was weak again, trading at BRL3.8500 at 1:00 pm EST, weighing on the coffee prices. During the week, Arabica prices declined 4.67 percent. The market traded in a range of more than 11.00 cents, increasing the volatility, as clear evidence of the “weather” market. Producers’ selling was noted before the 140 area, which became a strong resistance level and prompted long liquidation, meanwhile the industry buying took advantage of the drop.
London Market- Pre-market all the talk was of the Nov/Jan switch. Was yesterday’s late session push to a premium just an anomaly or the start of something more significant? Certainly the early exchanges suggested the latter as the front spread pressed on to post minor fresh highs on good volume. It was not long however before outright prices returned to the forefront of traders’ minds as talk of overnight rains in the Brazilian coffee belt started to spread around the market, prompting a wave of mixed spec and trade liquidation. The outright pressure quickly saw the board erase yesterday’s gains before moving into negative territory with gusto as the force of the move started to generate a momentum of its own. The structure too gave ground in the second half of the session – Nov/Jan returning from whence it came to end the day back at a single digit discount.