INTL FCStone Daily Coffee Report
Arabica Coffee Futures for March delivery fell 415 points to 157.70 cents per pound as speculative liquidations and origin selling pressured prices to oversold conditions. Weakness in the Brazilian real, falling 1% to USDBRL3.38 promoted origin selling, pushing prices below the 50 day moving average of 157.15. Open interest continues to drop, falling 1,201 lots yesterday, reflecting the liquidation. Participants now look at support levels closely as prices enter oversold conditions in mid-term technical indicators, with an objective of 155.40, the 100-day moving average. Deliveries increased yesterday, with 218 notices delivered yesterday, bringing the total to 287 lots.
ICE Futures US will be closed on Thursday on observance of Thanksgiving. The ‘C’ contract will close early on Friday, at 1:00 pm EST.
London Market- Flat price values tracked lower amid continued weakness in nearby structure.
Though prices lifted $6 off the opening bell, a failure to test $2100 prevented the emergence of fresh longs as volume remained subdued. Focus instead turned to the Jan/March switch, narrowing to +$1 as spec long positons continued to unwind into the hands of the commercial short. Outright price action was a reflection of the structural weakness for the remainder of the session, breaking through the 50 day moving average at $2084, before printing new lows for the week. Good volumes of roaster buying were present throughout, running into spec shorts with New York also operating under pressure.
Options generated significant turnover throughout, with 1000 lots of the Jan 1900/1800 put spread purchased at $10 with an 11 delta hedge at $2044. An additional 1000 lots of the May 2300/2500 call spread were bought at $30, with participants seeking cheaper upside protection as the futures market traded under pressure.
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