INTL FCStone Daily Coffee Report for July 25/17

Arabica coffee futures lost 2.9 percent on heavy speculative liquidation Monday. The most active position, September, closed 400 points lower at 132.55 cents a pound. The bearish tone was set by the COT figures released Friday after the close, which suggested that the non-commercials recent short-covering could be ending soon, and at the same time, that commercials have begun to re-establish the short hedges. Volume reached 40,630 lots, including 6,866 switches. The nearby Sep/Dec declined 5 points to end at -3.60 cents. Temperatures in Brazil were reported in the 40s and 50s across the coffee belt, and will remain similar for the rest of the week. No frost concerns for the moment. Also, a weak technical performance encouraged the spec selling, after coffee prices did not have the strength to fill an opening gap. Short term support is now at a 132 and 129.5, and resistance is at 135.80 and 137.25.  The dollar was steady and slightly higher. Wall Street traders are focused on the Federal Reserve which will announce Wednesday its decision on interest rates, after its two-day meeting.
 
An air of bearish sentiment greeted the start of the new week as trader’s digested weekend CFTC Commitment of Traders reports showing a quarter of the managed money net short position had been liquidated in New York. Lacking fundamental stories of its own accord, London looked to the ‘C’ contract for direction and tracked a wave of technical selling to close $40 lower. With origin pressure all but absent, much of the selling came via short term spec traders, with a void of resting commercial buying doing little to stem the negative momentum. Values remained supportive around $2100 basis September with a double low having formed at $2099 which technicians will look for a breach of if the market is to continue to search for lower prices.  The Sep/Nov switch traded better volumes throughout the session, turning over 2600 lots through a $5 range, uncovering support around $15 premium once more.  COT numbers released in London showed a 1906 lot increase in the managed money long position which now stands at 21,197 lots long.