INTL FCStone Daily Coffee Report
For the fourth consecutive session, Arabica coffee futures ended higher, as producers selling eased after the beginning of delivery period for the March contract. May-delivery futures settled 230 points higher at 151.85 cents per pound. Prices consolidated higher in the morning, finding resistance near the 200-day moving average at 151.10. Breakage of the resistance point accelerated the movement higher on buy-stop orders, reaching a high of 152.50 cents per pound for the day. Volume was limited, trading 24,226 lots, including 3,354 switches. Dry and warm weather forecasted for the next six days in the Brazilian coffee belt began worrying participants. One lonely delivery notice was submitted, bringing the total to date to 130 delivery notices for the March contract, adding to the bullish feeling. From Brazil, the announcement of Vietnam Robusta had caused discontent amid producers. In Rondoñia, a highway was blocked by protesters this morning, following similar protests in other cities on Friday. In the state of Espritu Santo, a Senator filled a bill to stop the agriculture ministry from allowing green Robusta coffee imports. In related news, COOXUPE said coffee import will hurt producers in Brazil. US FED meeting minutes will be released tomorrow at 2:00 pm, which might add volatility to currency and commodity markets.
London Market- Robusta failed to follow U.S. driven gains as arbitrage levels widened 2 cents, encouraging a layer of short covering capping the upside potential in the London market. Asian selling was once again present through the early parts of the day although remained light in volume. An early test and breach of the 20 day moving average at $2190 failed to trigger sufficient technical buy stops to initiate a move toward $2200 as arbitrage pressure into London began to apply a lid to further moves higher. With the May/May arbitrage having held around 50 cents through recent sessions, a fresh wave of arbitrage buying saw values widen through 52.5 cents, limiting London to a narrow trading range for the remainder of the session. Much of the volume was generated through nearby spreads, with the March/May trading 5000 lots, holding at $30 discount as the spec long continues to roll into the hands of the commercial short.
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