Arabica coffee futures reversed direction Friday to close higher helped by speculative short covering. The most active contract for September delivery settled 35 points higher at 151.95 cents a pound. Prices were under pressure early trading down 2.3 % or 2.45 cents to 149.15. The weak technical outlook encouraged the initial spec selling. The respect of the lower band of the Bollinger, oversold conditions, and book squaring before the weekend triggered the short covering when the selling eased. During the week, Arabica prices lost 7.65 cents or 4.8 %. The market was affected by a general sell-off of the markets following the strengthened of the dollar on FED news. The breach of the uptrend accelerated the speculative liquidation. Weather in Brazil was dry
across the coffee belt, and temperatures fell to single digit but without any frost threat expected at least for the next ten days. In Colombia, the protests have paused but it will take 3 to 4 months for the normal flows of coffee shipments to ports. Premium for Colombian beans raised to 75 cents from 55 cents premium before the national strike, according with report from Reuters. Technical factors may discourage selling in the short term, as prices are oversold (RSI 27.7%), and SSTK with a buy signal (SSTK 20 %/ 17%). Reduced commercial selling after the July FND (June 22nd) will allow prices to soar more freely. The recent wave of non-commercial de-risking eased today, encouraging values in Robusta to mount a reversal of yesterday’s losses to end the session 1% higher. Light follow- through pressure from the previous session saw values open marginally lower and swiftly test below $1600 basis September. However, consistent roaster scale down buying between $1600 and the previous low at $1594 slowed the early pace to the downside and prompted a reversal up to the intraday high at $1622 as fund and origin selling was noted more by absence. A brief retest below $1600 was encountered through the mid-session tracking losses generated in Arabica, but the situation was unchanged as the market failed to attract a fresh selling element towards the lows whilst further commercial support was uncovered sending values north into the closing bell. Technically the market is running into key support resting at nearby averages and congestion at the psychological $1600, which is slowing downside trend strength after encountering a week of negative macro influence.
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Arabica coffee futures closed lower Thursday in a broad market sell-off. The most active contract for September delivery settled 385 points lower at 151.60 cents a pound. Speculative liquidation continued to be encouraged by the weak technical perform. Since the breaking of the uptrend, more than 10,000 contracts have been liquidated as evidenced by the open interest. A typical reduction of the OI is reasonable ahead of the FND as well. Commodities declined hard affected by the rally of the US dollar, following yesterday’s FED statement that they might bring forward interest rates hikes faster than expected before. The outlook for beneficial rains for the US mid-west caused a sharp fall on the grain complex that spilled over other markets. In the soft complex, sugar fell 2.6 % and Cocoa 1.78 %. As reported by Bloomberg, some commodities have erased the 2021 gains. Support against the lower band of the Bollinger band and prices near oversold conditions could help the market before the weekend.
Robusta settled at $1598 per ton down $31 ref Sep. Market gaped down from the opening bell with the first trades 19 points lower trading at $1610 held the previous day low at $1592 coming close to erasing all the gains from previous session. Once again, the 20-day moving average provided support now standing at $1587. The dollar seems to be taking a greater effect on Arabica with Robusta acting as secondary market and walking down the latter slower thanks to partial support from the brasil real strength. Volume was moderate with 23,710 lots including 7,384 switches. Light business reported from Vietnam. Limited supply and weak demand pushed traders to the Indonesian market. |
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