october 13th, 2022.
Arabica coffee futures extend lower on long liquidation from previous session, forcing a breach below 209.45 and further stops below this level today. The most active contract for December delivery settled 760 points lower at 202.15 cents a pound. The volume reached 67,864 contracts, including by 18,801 switches. A firm liquidation of the active December- March switch pressured the market. The switch lost 2.25 premium to end at 6.10 cents. Notable drop in demand being reported by several origins: including Brazil, Colombia, and Centrals. From Europe, concerns of the still high cost of roasting; still high Natural Gas Prices and Volatility, Cost of Coffee plus differentials, drop in purchasing power of the Euro (-13%) year to date, USA inflation numbers reported today place further need for another increase of the Interest rates. Market expecting +.75% to possible +1.00% on the next meeting in November 1-2. Certified stocks declined 7,980 bags to 408,419 bags. Pending grading remains at 3,436 bags. No grading today.
Robusta drops 2% as loses through the larger ‘C’ contract weigh on prices, drawing values into the waiting arms of the roasting community. Values open under immediate pressure as the non-commercial sector sold responding to ongoing macro negativity. This saw value swiftly breach key support at $2133 basis Jan23 which triggered a wave of algorithm-based selling as systems tracked the uptick in downside volatility prompting a test below the phycological $2100 marker. However, with consistent roaster buying towards the lower end of today’s range and an almost absence of origin pressure, downside pace slowed, and values moved into a consolidatory phase into the later stages, Values have breached the lower Bollinger band averages whilst diving deeper into oversold territory, but with firm downside trend strength will hold shorts into the position.
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