INTL FCStone Daily Coffee Report
Arabica coffee futures closed higher on speculative buying. A constructive technical action encouraged the buying. The most active contract for March delivery gained 155 points to settle at 150.75 cents a pound, the highest level since Nov 30. Volume was moderate reaching 18,602 lots, including 1,943 switches. The active March-May switch ended -5 at -2.40 cents. The switch has been trading in a narrow range since November. In the options, more than 2000 March 135-130 puts spreads were traded. March options, calls and puts, exhibit a significant open interest than can act as natural boundaries for the market action. In related news, Brazil confirms that the CONAB’s report showing Conilon stocks of 2.2 million bags will represent a deficit close to 1.0 million bags by the next harvest. The government approved the sale of 43,200 tons of coffee from the public inventory. From Colombia, R Velez, head of the coffee federation, said that output will reach 14.5 million bags this year, the highest in 24 years. Farmers have been focused on productivity to increase yields, he added to Reuters. The dollar was firm supported by economic data released today. The dollar index advanced 0.5%.
London Market- London maintained its recent upward trajectory, driving above what was the short term upside target at $2259 en route. Prices lifted off the opening bell, adjusting to a final hour rally in New York yesterday evening. Strength in the Brazilian Real saw additional support enter the market, although values failed to move aggressively higher with the ‘C’ contract operating a holding pattern. Nearby spreads provided much of the volume for the session, with the March/May the most active, strengthening into $2 premium.
Options activity simmered, with 500 lots of the July 2250/2400 call spread traded at $54 alongside a 14% delta at $2258. There were 0 tenders in London today.
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