Sucden Financial Coffee Morning Comment, Options, FX Daily and GCA Numbers

Good morning and Happy Friday!!
 
Overnight, the GCA released their latest numbers, which revealed a sizable increase of 224,169 bags, leaving us with 7,114,52 bags warehoused. The configuration of the US market means that most of these stocks are Arabica, however a bit of guess work is required. The likelihood is that this news will be considered mildly bearish for Arabica, a market that was pegged back yesterday by sizable (presumed) unwinding of Arbitrage (selling NY buying Ldn), and with the roll out of the way we may see Sep look towards 125 in today’s session on the back of this.
 
Robusta continues its uptrend, perhaps being led by the strong back month structure, and we continued to be fairly active in the those as a result. Personally, I think we’ll see a continuation of the recent strength until the Sep expiry at the earliest, when it’ll become clear whether the rumour is just that, or indeed fact. July options go off the board next Wednesday, so keep an eye on the July/Sep structure, as players begin to react to their presumed resulting positions as a result of the expiry.
 
In Macro news, Brexit talks are believed to begin on Monday, and the FT are saying that the UK won’t be required to stay in the EU Single market as part of that deal. There’s an interesting opinion piece on Bloomberg this morning on FX Vols – with the author saying that “It seems no matter what major currency pair you look at, 3 months option implied vols are near or at their year to date lows, indicating options investors expect no summer fireworks for currencies”.
 
At time of writing, Sep-17 Robusta is being shown at 2106 (+1) on the preopen.
 
Currencies (Bloomberg)
GBP – 1.2769
EUR – 1.1155
BRL – 3.2752
DJI -0.07%
DAX +0.48