Arabica coffee futures settled higher consolidating after the recent high volatility affecting the prices. The most active contract for March delivery closed 300 points higher or 1.57% at 193.60 cents a pound. The market was supported by last night USDA report that reduced the 2023-2024 global supply surplus to 1.9 million bags from 4.1 million bags previously estimated. USDA sees world ending stocks continue to tighten falling to a 12-year low of 26.5 million bags. According with this data, the stocks/usage ratio at 15.6% could be critical. Significant revisions of the 2022-20223 forecasts added the bullish sentiment. The USDA report enjoys credibility among investment funds due to its consistency and lack of bias. Cert stocks decreased 32 bags to 247,912. Pending grading increased by 2,998 bags to 25,225 bags total.
Robusta Mar24 contract settled at $2964 +94 or 3.27% higher with a 2970/2838 range. A new front month and 2nd month all-time high for the 10 tons contract. Main triggers for the rally today are: Issues persisting in Vietnam with farmers reluctant to sell coffee, internal price ideas rise, ongoing issues in the Red sea limiting shipments and the usual pre FND short covering rally. Flat price volume saw 15k lots trade on the Mar contract. Structure also saw a big rally today with Jan/Mar trading 1.8k lots between 110/250 dragging Mar/May with it 76/99 range. This strength was another big signal for specs to add to long positions. Robusta Mar24 2850/2650 put spread vs 2950Δ18 traded 3000x @ 62, Robusta Mar24 3200 calls vs 2940Δ25 traded 2000x @ 65.