INTL FCStone Daily Coffee Report for August 10/17

Arabica coffee futures finished a slow session Wednesday with minor change. The benchmark contract for September delivery closed 10 points lower at 142.65 cents a pound. The OI decreased 4,480 as of August 08 to 205,335 lots.   Volume was again boosted by switches.  The nearby September – December switch narrowed to -3.45 cents. Coffee prices were under pressure early, due to weak real and the action of the previous day. However, reports from Brazil, indicating that some areas might be affected by the outbreak of the coffee borer provided some support to the prices. Friday’s September option expiration could keep prices within a tight range. Markets in general were slow reflecting the escalating tensions between US and North Korea. The dollar was volatile today, changing from positive to negative levels. Inflation data over the next couple days may provide some direction to the greenback.
 
Negative sentiment on the back of Robusta’s relatively poor close last night fed through into the opening period today as origin sellers offered the board into a relative vacuum. Spread weakness added to the feeling of general malaise with both Sep/Nov and Nov/Jan structures giving ground and by mid-session underlying support around $2115 was looking as if it could be threatened. It was only a mix of short-term spec interest and arbitrage related buying that ensured London did not fall too far too fast. Nevertheless, the action of the last few sessions does take on the shape of a reversal and until the price action is able to negate this (most likely with a convincing close above nearby resistance around 2175) buyers are likely to be a little more reticent than usual.