Arabica coffee futures retreated from morning highs with a positive settlement of 180 points higher at 180.30 cents a pound. Arabicas New Longs yesterday saw some follow through this morning to take the active May 23 contract to a high of 182.85, above technical resistance of 181.15. Equities opened higher following through on overnight strength, as traders gained confidence in steps taken to save Credit Suisse from insolvency. That then allowed money to flow back into the broader commodity sector overnight, as well as easing fears on Wall Street. The focus of the world is still on the Federal Reserve’s policy decision tomorrow. Volume and liquidity are low in mostly all markets, adding to the volatility. Most commercial participants in commodities are still going about their business, but larger speculative players are absent. The NY market had a total volume of 25,286 lots, including 6,041 switches. Certified stocks decrease by 288 bags to 775,785 bags, while stocks pending grading remain at 1,135 bags. No grading today.
COT (CIT) Non-commercials increase net short position by 1,988 to 2,527 net shorts in week to March 14.
The Robusta terminal continues to drive higher, testing key resistance at the 20-day moving average of $2136, basis May23 contract. Marginal changes in the open interest (101,377 lots plus 458) indicate recent gains have been generated via the short-term non-commercial sector. This dynamic would have remained the same today as origin pressure grinds to a halt, leaving the path of least resistance higher, with most expecting the long side of the recent arbitrage to be used potentially to stop coffee, which naturally draws a layer of support into the near structure. Technically speaking, upside momentum strengthens as oscillators reverse higher, which suggests further upside potential. However, given that this move has been generated via the momentum-following element of our business, we will need to see a settlement above $2136 tomorrow in order to keep this momentum intact.