Arabica coffee futures May 23 contract ended the week 120 points lower in comparison to last week on Friday and 345 points lower on today’s session with a settlement at 176.60 cents a pound. The NY market found resistance at the 20-day moving average; no additional momentum was found to trade above the 182 area. The weakness in the Brazilian real put pressure on Arabica, keeping the price range intact. One more time, the market felt comfortable trading in the 175/176 area for most of the session. No clear direction in the last two weeks trading both sides of the range, with a notable decrease in volume this week, the lowest volume of the year so far on Tuesday, 23,484 lots traded, including 5,523 switches, and today a total of 27,485 lots, including 5,580 switches. The May 23/July 23 switch had a range of +0.80/+1.45 today with a settle of +1.25. Certified stocks decrease by 1,540 bags to 787,375 bags, while pending grading stocks increase by 660 bags to 1,135 bags. No grading today. No COT today.
The early test and failure of the previous day’s high in London set the tone for the remainder of the session, which dropped over 1.5% as values tracked the macro lower, led by crude oil. This has seen levels return to an area of congestion around $2060 basis May23, with commercial interest within the current $2060 to $2150 weekly range grinding to a halt. The lack of commercial flow has confined the Robusta terminal to acting merely as an arbitrage tool, with participants observing a large short being established over the last two weeks (short Arabica, long London), and some anticipating the Robusta long to be used to stop coffee on the exchange against May 23 expiry.
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