INTL FCStone Daily Coffee Report
Arabica coffee futures declined Monday on speculative liquidation induced by the weak technical performance. The active contract for July delivery settled 150 points lower at 133.45 cents a pound. Activity was light with the volume reaching 14,131 lots, including 1,972 switches. The coffee market appeared to be isolated from the emerging currencies that were helped by the raise of the crude oil. Crude oil rallied 2.0% after two largest producer countries currently participating in the cutback production scheme announced that they will support extending to Q1 2018 the program. The real recovered 0.5% to USDBRL3.1025 and the Colombian peso 0.25 % to USDCOP2,914.0. After the close, USA April GCA stocks were reported at 6,890,354 bags, up 165,497 bags. This level is the highest since March 1994. Last year the GCA stocks went down 5,978 bags during the month of April. The average for the last five year is an increment of 139,000 bags.
From the technical point of view, the July chart shows the prices breaking a recent consolidation area and tending to test the low at 128.65.
Volume and volatility in London remain thin for the time being, with outright values content to hold a narrow trading range.
Flat price action was limited through much of the session as a brief move above Friday’s high at $2000 basis July failed to yield additional upside traction. With New York also struggling to generate a move higher, early longs scrambled for cover to move prices into negative territory, from which they held thereafter. Initial support emerged at Friday’s low of $1981, before final hour weakness pushed London through last week’s low at $1974, to test the much maligned gap between $1965 and $1974. Support emerged once more around these levels to only partially fill the gap, something which remains a target for technicians over to coming sessions. Much of the traded volume was once again generated through nearby structure, as the July/Sep held at $20 discount through 1400 lots, as speculative longs rolled into the hands of the commercial short.
This week’s COT numbers, based on the disaggregated futures and options section showed only minor changes, with 200 lots added to the managed money net long position with 1128 fresh longs and 928 shorts almost balancing one another. The Merchants sector reduced its net short by 865 lots, with 2152 new longs reflecting extended roaster coverage at recent lower price levels.
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