INTL FCStone Daily Coffee Report

A day before the US elections, ICE Coffee Futures for December delivery settled 300 points higher at 174.35 cents per pound. Friday’s COT report showed the managed money sector adding almost 6k net longs to their position. Up to Tuesday of last week, managed money’s net long position had reached 56,863 net longs, nearly 2300 lots shy of the record net long set on February 12th, 2008. Total open interest at the time of the report was mora than 13k lots lower than Friday’s figures. Open interest increased 6,574 contracts during Friday’s activity. New short speculative positions at the opening were quickly reversed as a wave of speculative buying pushed prices to new highs. A positive sentiment swept across markets after the FBI’s letter on US Presidential Candidate Hillary Clinton’s email charges was published. Coffee’s recent increased influx of managed money participation helped prices follow the macroeconomic move. In related news, weather conditions seem to improve in Brazil’s coffee areas, with good rainfall over the weekend reaching Espirito Santo, and continued scattered rainfall expected throughout the week. Market participants anticipate volatility this week with US presidential elections tomorrow, November 8th, December option expiration on Friday, and December position bookkeeping ahead of first notice day, November 21st.
 
London Market- The Robusta market posts a subdued session as primary focus centres on the ‘C’ contract mirrored in arbitrage levels widening to 79 cents. Levels opened $4 lower at $2184 and swiftly printed the intra- day lower at $2180 basis Jan17 encouraged by currency and the latest COT data negativity. However, after the initial drive lower, the short term spec community were unable to generate the momentum required to disturb recent bull trend. The early downside failure set the tone for the remainder of the session as values tracked gains in NY at a much slower pace fully reflected in the arbitrage which widened over 3 cents. Open interest showed a 843 lots reduction in exposure to 112,948 lots. Most of the reduction was registered against Jan17 which would have been generated via delta hedge liquidation against reduction in both $2000 and $2150 strike exposure. Nov16 exposure still stands at 2,926 lots after a second day of zero tenders in this notice period.