INTL FCStone Daily Coffee Report for July 12/17

Arabica Coffee futures settled lower on Tuesday, with the active contract for September delivery falling 170 points at 126.90 cents per pound. After reaching an early high, prices consolidated lower throughout the session, pressured by technical weakness. Open interest figures increased by 1430 lots, suggesting new shorts entered the market during yesterday’s negative action. Upon breaking the 127.00 strike level, prices fell to test the 20-day moving average near 126.00. A similar pattern of short covering during the close from the past few days lifted the levels from the lows. In related news, the IBGE has left their estimate for Brazil’s 2017-2018 coffee crop relatively unchanged, now pegged at 2,790,379 tons (46.506 bags). Cool temperatures are expected in Brazil, yet warmed than yesterday, with no threat of frost. The first world producer forum in Medellin began today. World leaders such as President Bill Clinton, President Manuel Santos, will be attending.
 
Strength in the nearby structure supported outright values in London for much of the day before tracking late afternoon weakness in New York to close lower for the fourth consecutive session.  An absence of fresh fundamental news overnight resulted in a flat morning with little commercial activity on either side of the market. Much of the traded volume was generated through the Sep/Nov spread which proceeded to turnover 3000 lots across a $10 range attracting the attention of the short term speculative community following momentum higher. Open interest in Robusta looks to have plateaued for the time being, holding relatively unchanged since the beginning of the month representing dwindling commercial interest at current levels. The July delivery month still holds 4950 lots of open interest with today’s 77 tenders raising the monthly total to 2812 lots. Technical parameters remain largely unchanged with the double low at $2064 intact for now whilst values remain well below both last week’s high and the nearby high at $2168 and $2177 respectively.