Arabica coffee futures closed lower on Thursday but recovering modestly after hitting a 14-month low. The active December contract lost 90 points to settle at 178.85 cents a pound. The bearish sentiment continued to be fueled by fundamentals and the weak technical performance. The weather in Brazil continues favorable with rains returning to the south-central areas for the next five days. Only the areas of Baja Mogiana and Cerrado appear that will end with hydric deficit in October, according with SOMAR. Despite certified stocks at ICE authorized warehouses are at 385,465 bags, a 23-year low, talks among traders indicate that 200,000 bags will be presented for grading soon. In the last two days a total of 56,000 bags have been presented and are now pending for grading. Technically, the market remains in oversold terrain, with a slightly bullish divergency that suggest a possible corrective bounce.
Robusta JAN23 contract settled at $1878 +3 with a 1909/1875 range. Fairly subdued session compared with the last couple of weeks but to be expected, sometimes the market just needs to take a breather. Robusta tried to push higher off the back of Arabica having a small intraday rally but couldn’t hold on to any gains closing on the lows of the day finding support on that lower Bollinger band level at 1875. Volume remains stagnant with just over 10k lots on JAN23, but spreads were thin and choppy JAN23/MAR23 had a 10/18 range on only 1430 lots. The JAN 2000/1900 ps LU traded 3650x @ 63.
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Arabica coffee futures suffered another sharp drop on funds and speculators selling. Amid a bearish fundamental picture, the break of potentially support levels triggered aggressive selling in today's session. The benchmark contract for December delivery closed 605 points lower at 179.15 cents a pound. The volume reached 61,794 lots, including 19,844 switches. Significant activity was noted in the near December-March switch, which continued to lose premium finishing at 2.45 cents. Frequent rains in Brazil have created a better scenario for the upcoming harvest. The sales of funds could stop being so aggressive, to the extent that prices approach the support area of 170, an important level where the rally began at the end of July last year after the frost. Certs stocks declined 1,240 bags to 386,465 bags. Pending grading 26,129 bags. No grading today.
JAN23 contract settled at $1874 -74 with a 1952/1872 range. With the speculative community in full sell mode the market continues to print new lows. A mix of macro and fundamental reasons is driving both coffee markets lower. Roaster buying has been seen but this is not enough to absorb the selling coming from the specs who are now most certainty nett short. Flat price volumes were strong with 12k+ lots trading on JAN23 and 3K Jan/Mar spreads between +10/+17. The Jan 1950/1900 ps traded 500x @ 31 and the Jan 1900/1800 ps traded 500x @ 44. |
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