INTL FCStone Daily Coffee Report July 7/17

Arabica coffee futures closed lower Thursday as some short-term specs opted to take profits. The contract for September delivery ended 90 points lower at 129.10 cents a pound. Volume was moderate reaching 30,019 lots. Switch activity picked up a little with 5,280 switches traded. The active September-December widened 10 points to end at -3.55 cents, after exchanging between -3.35 and -3.55. Yesterday’s short-covering was evidenced by the decrease of the open interest. Yesterday the OI declined 2,116 to 222,104 lots. In today’s session, short term profit-taking came swiftly, as the prices approached a key level of resistance. During June, the market developed that area against 132, basis Sep, that remains unbroken.   In Brazil, Safras y Mercado reported the progress of the harvest at 50%, compared with last year 52% and the average of the last five-years of 51%.  Exportadora Guaxupe Ltd., reported crop at lower yield than average, with only 23% to 25% of bigger beans of total compared with expectation of 30%.  Dry weather continues to predominate across the coffee belt, with temperatures stable and no frost potential. Next week, from July 10 to 13, the World Coffee Producers Forum will be held in Medellin Colombia. FNC, has confirmed the participation of President Clinton in a panel about economic sustainability and rural development for the global stability and the democracy.
 
Even as New York traded to minor new highs, London remained resolutely rangebound - hemmed in by good Asian origin selling in place overhead. The arbitrage traded as wide as 33 cents at one point before the ‘C’ contract began to ease off later in the session. While New York’s second half weakness did tempt some of that overhead selling to come to market in London, it was not enough to make a material impact and the range, for now, remains. Overall exposure was up 1,651 lots reflecting fresh structural positions in Sep/Nov. Open interest now stands at 105,779 lots with spot July17 exposure at 6,127 lots. Deliveries continue to follow a similar pattern with another 1,153 original tenders today taking the total for the month to 2,715 lots.