INTL FCStone Daily Coffee Report

Arabica coffee futures fell on Wednesday on slow dealings. The most active contract for December delivery lost 90 points to settle at 157.85 cents a pound. Weather report forecasting good rains for the main coffee growing areas of Brazil caused early speculative liquidations, however prices recovered after lack of follow through was noted. On Brazil weather news, the blocking pattern not allowing rains began to dissipate, allowing rainfall for the next 4-5 days, reported SOMAR. For the next week, heavy and more intense rains are expected, they added. Volume reached 25,261 lots including 4,296 switches. The active nearby switch widened 5 point to end at -3.50 cents. Good interest buying remains at -4.00 cents. On the options, activity continued on close to the money strikes for the December position, while a large clip fence on March 170 Call/ 155 Put was noticed. The real trading was slow as participants expect the COPON’s decision about the ZELIC rate tonight. The USDBRL reached 3.1688. Analysts are expecting a decrease of 25 to 50 base points. In addition, crude oil gained 2.25%, buoying emerging market currencies. In other macroeconomic news, the European Central Bank will announce their interest rate decision tomorrow morning.
London Market- London consolidated lower throughout the session, following two days of explosive movements higher. Additional buying propelled values $8 higher off the opening print, to the day’s high at $2161, where a double high now exists and which will act as a short term target to the upside. Origin selling remained absent with downside pressure provided through the liquidation of spec long positons. Roaster buying at the bottom end of the day’s range provided support, as prices bounced and firmed away from the session’s lows although in diminishing volume as the market moved back higher. November options expired today against a futures reference price of $2094, leading to 1,633 lots of open interest in the $2100 calls being abandoned. However, 16,995 lots were exercised between $1500 through $2050 call strikes, which should neutralised a large percentage of the Nov16 futures exposure to around 20,000 lots open.
The Jan 2000/1900 put spread vs selling the 2400 call traded 1000 lots with a 28% delta, buying 280 Jan futures at $2136. An additional 500 Jan 2150 calls were purchased at $83 alongside a 44% delta at $2136