INTL FC STONE- COFFEE COMMENTARY
Arabica Coffee futures continued lower on Thursday, with the active contract for July delivery falling 120 points at 129.50 cents per pound. Prices reached an early high, and consolidate lower throughout the entire session, with every attempt to resurface to positive territory being met by active speculative selling and possible book squaring ahead of the end of the month. Upon breaking through the 130 support level in July, STOP orders accelerated the movement downwards. The Brazilian real weakened further today, but the selling was alleviated by active intervention by the Central Bank of Brazil. Tomorrow’s US Q1 GDP figures and Brazil’s unemployment figures might add volatility to currency and commodity markets. 2 additional delivery notices were registered, with a total to date of 595 lots.
London operated in a calmer fashion throughout the session, lacking the volatility which has been a feature throughout the last week. Flat price action looks to have established a short term base around $1900 basis July for now, as participants focus on front month management ahead of Tuesday’s first notice day.
Prices slumped $18 off the opening bell, responding to final hour weakness in New York yesterday evening and an absence of resting buying orders in the market accentuated the move. A brief recovery back to around unchanged failed to uncover sufficient intra-day longs to test yesterday’s high and prices were content to tick lower for much of the rest of the session with the ‘C’ contract holding in negative territory throughout. Overnight open interest for the May delivery contract stands at 11,374 lots with one session to go until notice day, as London observes a public holiday on Monday. The May/July switch traded 3600 lots and continued to hold around $31 discount while 2100 lots of July/Sep traded at $15 discount. A close eye will remain on front month action through tomorrow in order to gauge open interest carried into notice period.
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