INTL FCStone Daily Coffee Report for July 13/17

Arabica Coffee Futures traded slightly higher on an inside day on Wednesday, with the active contract for September delivery settling up 70 points at 127.60 cents per pound. Prices consolidated within yesterday’s range, supported by a firm Brazilian real. USDBRL strengthened 1.39% to 3.2066 on news that the former Brazilian President Lula was found guilty of corruption. Volume reached 21,861 lots. Open interest figures increased over 4500 lots yesterday, suggesting additional short positions entering the market. Prices once again found support near the 20-day moving average, respecting yesterday’s high and low. CONAB published their estimate for Brazil’s private coffee stocks at 9.86 million bags, 27.4% lower than in 2015. In macro news, Fed President Yellen began her testimony against the US Congress, noting that gradual rate hikes, and reducing of the balance sheet are in the pipeline.
 
 
Significant drawdowns in London certified stocks attracted the attention of participants with 1000 lots having been drawn over the last three sessions. Stock numbers have maintained a steady downward trajectory since the middle of May, with this recent surge lower taking certified Robusta numbers to the lowest since January 2017. The Sep/Nov switch is likely to operate under renewed scrutiny over the coming sessions although held comfortably within the middle of recent trading ranges around $19 premium as the market digested the news. Continued commercial inactivity saw outright values post an inside day as London failed to generate momentum in either direction. With newswires thin on both macro and fundamental stories, many await activity on the July delivery month for further market signals. Zero tenders for the session leaves the monthly total at 2812 lots with 4877 positions remaining open in July17. Further down the board a 2000 lot EFP was posted basis Sep17, following on from yesterday’s 1487 lot posting in