INTL FCStone Daily Coffee Report - Sept 27/17

Arabica Coffee Futures for December delivery found support near the 130.00 level on Tuesday, settling up by 70 points at 132.25 cents per pound. Volume was moderate, trading 25,241 lots, including 3,032 switches. Prices traded in positive territory throughout most of the session, supported by a strong Brazilian real. Short term correlation between the Brazilian currency and coffee prices seems to be correcting towards positive levels. Support near the consolidation area of late August/early Sep held the market. Lack of follow-through to the downside prompted some short covering. US Fed Janett Yellen’s comments regarding the possibility of a more hawkish monetary policy propped the dollar higher, limiting coffee’s upside, ahead of Thursday’s GDP figures. Throughout the next few days, end-of-quarter book squaring can bring volatility to global markets. From a technical standpoint, short term indicators suggest a possible near-term correction, although the longer-term outlook remains negative.
 
The Robusta market in London had a quiet session.  The active November position settled $7 down at $1,999 per ton.  The volume just above 7,000 lots and the small range of transactions reflected the lack of business.  The structure continued with backwardation up to March, with the active Nov/Jan adding $1 to end at $25 premium.  A total of 50 delivery tenders were issued last night, for a total of 648 for the September delivery.