June 29th, 2017

Arabica coffee futures for September delivery finished 60 points lower at 124.40 cents a pound. Volume was moderate at 17,546 lots, including 2,617 switches. The quiet physical market and the bearish sentiment of the commodity markets kept coffee prices under the similar tendency. Weather in Brazil remained warmer across the coffee belt. Forecast of cooler conditions are expected for next week but frost is not currently expected. Some book squaring ahead of the end of the Q2 could add some support to the coffee prices. Commodity markets in general extended recovery today. The CRB index gained 0.3% to end at 392.69. The markets in US will be closed next Tuesday in observance of the Four of July holiday.
 
Volatility in London seems to have settled for the time being, with flat prices continuing to operate within a narrow weekly range. Dollar weakness throughout the session did little to attract speculative buying back into the coffee markets, with London once again content to hold around unchanged. Moderate support emerged via the arbitrage as the Sep/Sep narrowed through 29 cents, although scatterings of origin selling returned to prevent a test of the option strike at $2100. Much of the focus was on residual July positions with 4000 lots of the July/Sep trading a $5 range. The recent pattern of position liquidation continued once more with open interest falling for the thirteenth consecutive session. Front month July saw much of the liquidation ahead of Monday’s first notice day whilst moderate reductions in exposure were visible further down the board.