INTL FCStone Daily Coffee Report

Arabica coffee futures for December delivery gained 180 points to 157.90 cents a pound.  The strengthened of the currency and   the tightness of the supply from Brazil encouraged the speculative buying.  The volume reached 26,500 lots, including 5,582 switches.  In options,  only  volume on the  March 147.50 puts  with 500 lots traded.  The real strengthened to the highest level since July 2015, trading at USDBRL3.1183.   A more favorable scenario for investors with news and flows have contributed with the recovery of the Brazilian assets recently.  In the coffee market, the Friday’s COT report showed non-commercial added 7,734 longs  as of Oct 18, holding now a net long position of 39,040 lots.  The open interest continued to increase , reaching 200,158 lots as of Oct 21, the highest level since last January. 
 
London Market- The Robusta terminal continues operating in an upward trajectory as on- going rains delay the early Vietnam harvest, reducing commercial pressure.  Nov16 open interest reduces overnight to 22,446 lots with certified stocks standing at 13,711 lots.  Nov16 based structure generated 4,286 lots with a further 858 AA’s registered, we would expect exposure to be neutralised almost totally over the coming days via financing rolls in the form of EFS.
 
Option volume fails to slow with buying 500 Jan17 $2000 calls selling 390 jan17 futures (78% delta) @ 2152 trade at $180 and buying  250 jan17 $2050 put selling 500 jan17 $1750 put buying 65 Jan17 future (26% delta) @ 2150 trade at $38.
 
Technically Robusta’s move off the lows has been textbook of late and the recent action is giving no indication price action is on the wane. However, the fresh highs in London have not been support by similar fresh highs in New York and unless this rectifies itself quickly, it may become a cause for potential concern.