INTL FCStone Daily Coffee Report for July 20/17

Arabica Coffee Futures finished higher on Wednesday, with the active contract for September delivery up 90 points at 135.80 cents per pound. Prices consolidated with little action during the early trading hours, until a wave of buying quickly pushed prices past recent highs. As participants focused on the arbitrage between New York and London, New York saw light origin selling amid stronger producer currencies. Buying towards the close pushed prices back up to intraday highs. The Brazilian real strengthened 0.31% to USDBRL3.144. Temperatures in Brazil remain low, with lows in the next couple of nights likely to fall to the mid 30s and low 40s in southern Sao Paulo and Parana, yet no risk of frost is expected. From a technical standpoint, short term oscillators remain in overbought conditions, as prices consolidate near the weekly mid-band and 100-day moving average. Colombia will be closed tomorrow in observance of the Independence Day.
 
London observed a narrow range through much of the session before weakness inside the final thirty minutes saw values fall and settle below short term areas of support. With commercial activity thin, a more subdued Dollar did little to  attract short term interest in to London with values content to hold around the 10 day moving averages around $2119. Moderate selling pressure was generated via the arbitrage with the Sep/Sep widening further though 39.5 cents; levels not seen since 05 June. The late breach of the double low at $2117 leaves London open to a test of the psychological $2100 barrier and further areas of support around $2064 although lacked sufficient time for any further follow through activity. The Sep/Nov spread weakened into $15 premium through 1900 lots and will remain carefully monitored having found support at this level for the fourth consecutive session. Good options volume was generated with 1250 lots of Sep17 2050/1950 put spread trading at $22 with an 18% delta hedge at $2128. A further 1250 lots of Sep $2100 calls traded at $72.