INTL FCStone Daily Coffee Report

Arabica Coffee Futures extended the recent rally by 120 points on Wednesday, with the active contract for July delivery settling at 137.45 cents per pound. Prices consolidated between positive and negative territory throughout the session, helped by a late rally in the London market. Lack of fundamental news left the market to be driven by technical and macroeconomic factors. Prices broke through the weekly highs and the 20-day moving average, running into buy-stop orders. The next technical resistance level aside from the psychological 140 level is the 50-day moving average at 141.60. On the macro front, the US FED decided to not change interest rates (1%). In fundamental news, Colombia’s export data will be published on Friday.
 
The frantic nature of the market over the last couple of weeks appears to have subsided for now, as flat prices continued to consolidate higher throughout the session.  A void of resting selling orders in the market contributed to the move, with origin pressure absent once more.  The $2050 option strike and the 20 day moving average at $2088 basis July look to be short term targets for further moves higher if the market is to continue its corrective action. Much of the volume revolved around the July contract, with the July/July arbitrage narrowing to 44 cents as New York held stagnant. The July/Sep spread traded 2000 lots, weakening into $16 discount. Further volume down the board was visible via the options market, with 2265 lots of Sep 2000 calls trading alongside a 55% delta hedge at $2025. The May delivery contract saw 47 tenders and 91 re-tenders for the session, with 767 lots of front month open interest carried into the day.