INTL FCStone Daily Coffee Report

Arabica coffee futures closed lower Monday as the weather prospects in Brazil improved. The most active contract for March delivery settled 125 points lower at 151.15 cents per pound. Volume reached 28,086 lots including 7,874 switches. The active switch March-May widened 5 points to end at -2.55 cents. The volume of switches has been below the average, due to a significant reduction of the open interest. As Oct 30, ahead of the Dec delivery period, the OI totaled 214,133 lots compared with 184,448 today. A more humid Brazil coffee belt is expected for the next 6-10 days. According to CROPCAST, an American based weather analyst, above normal rainfall is forecasted across most of the coffee areas, and will bring a notable relief to the coffee trees. Friday’s COT report showed commercials increasing their short position by 7,736 to 63,412 net shorts, while non-commercial increased their long position by 6,479 to 25,281 net longs. In other news, large US firms will report quarterly results this week that will help to reveal the state of the economy. The FOMC will publish on Wednesday a policy statement after the two-day meeting. Analyst do not expect a change in interest rates.  
 
London Market- Commitment of Trader numbers were released this morning, revealing yet another build in the managed money position. Net long now just over 47,000 lots long basis the Disaggregated futures and options report.  The increase in position coming from fresh longs in contrast to Arabica which has seen similar gains but on short-covering. In outright terms it was very much a game of two halves: early weakness attracting an element of short-term spec commitment before the scale down buying that has been in place around the mid-term moving averages for some days now retook control, leaving the board to work its way back to unchanged by day’s end.  March 2400 Calls traded actively through the second half of the session as bargain hunters took advantage of the dip. Last trading day for the January contract tomorrow.