INTL FCStone Daily Coffee Report

Arabica coffee futures for March delivery settled 60 points higher to 150.15 cents per pound. The volume increased to 57,603 lots, boosted by 18,323 switches.  The nearby switch, March-May narrowed 5 points to end at -2.35 cents. The dollar was a significant factor in today’s session, affecting the dollar-denominated commodity prices, and causing the reversal of the coffee futures prices action. Concerns ahead of the FED decision triggered the volatility of the greenback. The FED left the interest rate unchanged. The real was mostly unchanged at USDBRL 3.1505. From SOMAR, rains in Brazil continued concentrated over Parana, Sao Paulo and southern Minas.  An ample coverage, that includes Espiritu Santo is expected from next weekend. Arbitrage activity was noted when the market turned into positive territory, erasing the day’s loses, as soon as the Robusta market closed in London.
In options, high open interest is noted in March puts below the market, with expiration only 9 days away. 1000 lots of the 170/200 call spread in July were traded today, with a sale of the 140 put and the market at 155.00 in the morning.
 
London Market- Volatility is cyclical so they say and after a long period of relatively benign action in Robusta the market is certainly starting to take on a more active tone. Following a disappointing start given the call off of New York, London excelled itself to the upside as rumours started to circulate that there may be an impending announcement from the Brazilian government regarding the importation of Robusta. Values pushed sharply higher, bringing Vietnamese sellers back early from the end of their Tet celebrations to put a lid on values above $2260. As time passed and the ‘announcement’ was clarified as comments in a Reuters article, the board slipped back but did not capitulate, ending the day posting minor gains. Despite all the fireworks, the 2200/2265 range remains intact for now.