INTL FC STONE-DAILY COMMENTARY

Arabica Coffee Futures for December delivery ended Friday’s session 270 points higher at 155.40 cents per pound. During the week, futures prices increased 7.4 cents, or 5% amid weather worries in producing regions in Brazil. According to Somar, rain in the Brazilian producing regions will become more scattered until Wednesday, where a cold front brings rains to Parana, Sao Paulo, and parts of Minas Gerais. The COT report showed managed money decreasing their overall position by liquidating over 3,000 longs and 1,000 shorts, decreasing their net long position by almost 2,300 lots to 36,849 lots. Meanwhile, commercial buying was noted with merchants adding 1,200 longs and only 334 shorts, decreasing their net short position to 78,471 lots. In related news, the ICO updated their supply/demand balance for 2015, showing a deficit of 3.3 million bags, higher than 2014’s 2.7 million bag deficit.
London Market- Stronger than expected Chinese inflation data provided an air of bullish sentiment going into the session, despite further dollar strength looking to act as a headwind to additional moves higher. With volume down on yesterday, a result of less turnover through the Nov/Jan switch, the market struggled to generate fresh momentum of its own accord. Strength in the ‘C’ contract gradually pushed London higher through the session, breaching yesterday’s high at $2053 where fresh Asian selling became visible. Open interest increased by a further 3082 lots, a combination of delta hedges from yesterday’s options activity as well as fresh longs added as values tick higher. Interest remained visible in the March 1900 put, with 1000 lots rolled from Jan, with $19 paid, as participants look to cheaply roll downside protection down the board with flat prices moving higher.