INTL FCStone Daily Coffee Report
The ICE coffee futures closed higher on Wednesday; May delivery contract closed 55 points higher at 141.45 cents per pound. After the FED deciding to raise interest rates and the federal funds rate target by 25 points, the Brazilian real strengthened by over 2% after the coffee market closed. This prompted buying at market open, reflecting a positive gap of 120 points at the opening. The upward momentum took the prices near resistance level at 144.20, where the 20-day moving average is and the Fibonacci technical delay of 38.2% (since the beginning of the year). Lack of follow through caused the short term long positions to be reversed, erasing the daily high and partially filling up the opening gap. The Brazilian real experienced volatility this session, trading between 3.09 and 3.11, influenced by the activity of the coffee market. In weather news, the coffee belt in Colombia will have rains in Medellin, Armenia, and Manizales, helping the main crop.
An air of bullish sentiment was apparent through the early part of the morning in response to overnight Dollar weakness following yesterday’s Fed meeting. Prices lifted $15 off the opening bell, albeit through relatively light volumes, with short term spec buying returning into a void of resting selling orders. Small clips of origin selling became visible as London moved above the 50 day average at $2189 and towards the psychological $2200 barrier, with New York also pushing higher. Additional upside momentum failed to establish following a brief break above $2200 with London proceeding to mirror the action of the ‘C’ contract, as early spec longs scrambled for cover. The May/July switch remained active, trading 1000 lots and weakening into the hands of the commercial short at $20 discount. Outright values ticked lower for much of the rest of the session, covering the opening gap en route to closing broadly unchanged.
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