INTL FCStone Daily Coffee Report -Sept 29/17

Arabica coffee futures fell Thursday on speculative selling.  The most active contract for December delivery closed 85 points lower at 128.50 cents a pound. Volume was 24,842 lots including 3,099 switches. The session was slow, with little commercial participation. Participants continued to follow closely the weather forecast in Brazil, which have been very dry during September, but rains are expected across the region by the end of the week. SOMAR is forecasting heavy rains for the main coffee producer areas while CROPCAST projection is for rains below normal. Despite that some pictures have been circulating recently showing some coffee plantations affected by the dry weather, experts consider that it is too early for assessment of any damage. Tomorrow we can expect some book squaring ahead of the end of the month. Dollar fell 0.2% today after the recent rally. Crude oil reversed from fresh highs, ending $0.53 down at $51.92 per barrel.
 
The lows of early September remain intact for now as values failed to drive through $1914 despite the presence of follow through selling across the early part of the session. An air of bearish sentiment was apparent before the opening as traders’ digested final hour weakness in New York yesterday evening and an early breach of $1945 attracted fresh technical selling. A stagnant U.S Dollar eased the system selling pressure which has been a feature of previous sessions, as values began to run into resting commercial buying ahead of the nearby lows. A failure to breach $1914, coupled with an intra-day recovery in the ‘C’ contract saw early shorts scramble for cover in London which went on to close around unchanged. Technicians will look at the price action of the session positively as we head into the final session of the week, noting a ‘hammer reversal’ on a candlestick chart. Good options volume traded once more with 1000 lots of the Jan18 2000/1800 fence (to the call) trading at $20 with a 64% delta hedge at $1920.