INTL FCStone Daily Coffee Report

Arabica Coffee Futures ended slightly higher on Friday, settling 95 points higher at 152.40 cents per pound for the March-delivery contract. Prices began the session under pressure, breaking yesterday’s low. However, disappointing 4Q US GDP figures( +1.9% vs expected +2.1%) brought volatility to the currency markets, strengthening the Brazilian real and supporting coffee prices back into positive territory. The Brazilian real strengthened 1.18% at USDBRL3.13, levels not seen since October 2016. Short-term speculative buying pushed the market higher. Resistance below the 100 day-moving average halted the up move, prompting short term speculative liquidation. A congestion of moving averages and technical retracements kept March coffee futures trading in a 6.7 cent range during the week, as prices consolidated lower in overbought territory, affected by macroeconomic and technical factors. Participants now await weather developments in Brazil for the beginning of February. On the fundamental side, COMEXIN published their estimate for the 2017-18 Brazil crop at 49.4 million 60kg bags.
 
London Market- Strength in the Brazilian Real provided the foundations for London to move higher, aided by a void of origin pressure. Support remained active around the $2200 mark, attracting intra-day longs into the market although failed to gain sufficient traction to test the weekly high at $2262. Though lighter in volume than previous sessions, the March/May spread continued to hold firm around $13 discount, with participants awaiting Monday’s COT figures and will monitor the net position of the spec community closely. There were 13 tenders for the session and an additional 78 lots of Jan/March traded, but with overnight open interest in the delivery month standing at 802 lots, considerable interest carries over the weekend, with two trading days left.