July 18th, 2022.

Arabica coffee futures surprised traders with a sharp rise on Monday. The contract for September delivery closed with gains of 1,540 points at a rate of 215.20 cents per pound. Funds seemed to be back in the commodity markets again on the news that the FED might not be as aggressive in raising interest rates as initial expected. The dollar eased a bit giving markets a boost. Funds have been flowing out of commodity markets since mid-April. According to the latest CFTC report on Friday, the funds reduced the net long position by 6,705 lots to 16,943 lots as of Tuesday of last week. On February 15, the funds were holding a net long position of 53,279 lots. Fundamentally, the decrease in certified inventories continues to offer support. Certified inventories fell 6,010 bags to 734,157 bags today. Pending grading: 0.  

Big moves in coffee today. With a break in the bearish macro picture, it gave the market a chance to trade the fundamentals which have been simmering away in the background. Quite a violent short covering rally in Arabica triggered Robusta to do the same. Sep22 opened up $7 from Fridays close and basically did nothing but march higher all day, printing a high of $2005. Bit of defense around the $2000 mark with the market struggling to keep above this level settling at $1992 +69. The move today was certainly driven by short covering running into very little commercial selling. SEP22/NOVV22 went out at +5 trading a mere 2.5k lots with a majority trading at +4. No real notable options but the SEP22 2000 puts still have over 5.3k of option OI which will create whip across this level should we test it again.