September 8th 2022
Arabica coffee futures closed lower Thursday as recession concerns put pressure on the commodity complex. The renewed Chinese lockdowns to contain the COVID contributed to the bearish sentiment of the markets. The active Arabica coffee contract for December delivery settled 105 points lower at 222.20 cents a pound.
The nearby December – March switch lost 40 points premium ending at 5.50 cents as the recent buying interest eased. This structure has traded with high volatility since last month reaching up to a premium of 7.00 cents as dealers hedged positions in the event of a shortage of fresh coffees. Activity remained modest with 35,738 lots traded, including 9,533 switches. The European central Bank raised interest rates by a record 75 basis points above 0% to 0.75%, for the first time since 2012. At the same time the Federal Reserve confirmed it will continue to raise interest rates as it is strongly committed to bring inflation down. The next meeting of the FED will be on Sep 20 /21. Dollar and the Latin American currencies ended mixed with little change. Arabica certs increased by 10,757 bags to 624,470. Pending grading declined 14,293 to 33,551 bags. Grading today: 18,649 bags. Passed 11,457. Failed 7,192.
Robusta NOV22 contract settled at $2276 +38 with a 2282/2240 range. With the start of the wet season in Vietnam we saw a very positive performance from Robusta despite Arabica struggling to make any gains on the day. While today was a ‘’green’’ day it was still an inside day candle not quite breaking out of yesterday’s
range but certainly testing the high from yesterday. Admittedly this was all on low volumes but generally speaking when volumes are low, Robusta will shadow Arabica but today it bucked that trend. NOV/JAN traded
between 16/21 on 1.9kots settling at +21. Plenty of action on the JAN/MAR CSO with 3000x 0 puts trading at 4 and 500x 20 puts trading at 10. Jan23 2350 calls - Sell Jan23 2600 calls - Sell Nov22 2350 calls – traded 3000x
laid up @ $2.
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