INTL FCStone Daily Coffee Report

Arabica coffee futures consolidated higher on spec buying.  The active contract for March delivery closed 85 points higher at 142.85 cents a pound.  Volume reached 22,341 lots.  In the options,   600  Mar 165/175  call spreads,  and  400 plus Mar 160/140 fences  traded.   BRL and COP traded with little change.  The market action was inspired by  the yesterday bounce.   With the market in oversold territory,  a corrective up move is  now possible.  Investors in general are waiting for the result of today and tomorrow  FED meeting.   Financial markets are expecting   a 25 bases points increase. Last increase was at the end of last year.  Furthermore market participants will follow closely the language of tomorrow’s FED statement, which could indicate the trend for additional boosts of the interest rate.  In related news,  Brazil may allow green coffee imports,  an official from the Agriculture Ministry said today.  Last month  rumors circulated that the government was discussing the re-import of Conillon  stocks from European warehouses, however the idea was rejected after some phytosanitary problems aroused.   Terraforte, a large coffee exporter in Brazil, said that their estimate of the 2017-18 crop will be published next January. 

Values lifted $18 off the opening bell as a response to yesterday’s final hour rally in New York, with a  void of selling failing to provide significant resistance. With commercial buyers continuing their recent support of the market, flat prices ticked higher, though failed to attract fresh longs following a temporary breach of the 50 day moving average at $2046. Price action stagnated for the remainder of the session, offering little change with sporadic origin selling providing a lid to the market, absorbing clips of commercial buying which remain prominent. The structure continues to provide the bulk of the volume, with the much maligned Jan/March trading a $13 range while the March/May weakened through reasonable volumes.
Options volume was generated through 550 lots of the Jan 2050/2150 call spread, bought at $31 with 198 Jan futures sold at $2060.