Arabica coffee futures finished lower Tuesday at the end of a session dominated by spreads trading. The benchmark contract for July delivery settled 245 points lower at 157.70 cents a pound. Volume reached 82,316 contracts including 29,114 switches. The nearby July /Sep switch widened to -2.15 cents reflecting the long fund rolls ahead of the FND June 22nd . Light rains in Brazil Parana and Mogiana areas were reported during the last 24 hours. A more ample coverage will continue until middle of next week, however only small accumulations are expected. According with news cables, international buyers have suspended buying coffee from Colombia due to the non-compliance and shipment delays. Despite some blockades have been removed, still there are disruptions. Shipping from Atlantic ports is more costly. Certified stocks increased by 3,277 bags to 2,109,297 bags. Pending 97,538 bags. Grading today 15,374. Passed 11,412. Failed 3,962. Technically, the trend remains bullish with support at 156 and resistance at 167, basis the July contract.
Robusta settled at $1596 per ton down $29 ref Jul, Market traded through previous day high at $1636 finding heavy resistance above the upper Bollinger band at $1638 tracing down all gains from yesterday successfully breaching the low at $1589 and testing around the 8 day moving average at $1585. Volume has double in the last week trading 35,364 lots including 11,045 switches.
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Arabica coffee futures for July delivery settled 150 points lower at 160.15 cents a pound. Despite that analysts consider it is late for the sufficient soil moisture recovery in the Brazil’s coffee areas, reports of rains and the forecast of similar conditions for this week, influenced in today’s action. Lack of solid buying after an initial rally, encouraged the spec liquidation. Also selling of the active July / September switch added weight on the prices. During the last five years this switch has traded between -1.80 to -2.60 cents attracting substantial speculative participation. The switch weakened to -2.10 cents. A total of 28,933 switches traded, boosting the volume to 82,661 contracts. Certified stocks increased by 9,307 bags to 2,106,020 bags. Pending 108,025 bags. Daily grading 16,100. Passed 11,213. Failed 4,887. Another gravity defying performance observed through the Robusta terminal as arbitrage related support helps with upside trajectory. However, outright flow was subdued as most participants focus centred on July21 management as FND approaches. This is shown by the july21/sep21 structure accounting for 60% of the turnover as the market continues to find commercial shorts willing to roll positions forward sub $27 discount. Heavy option activity also registered with 2,000 sep21 1700/1850 calls versus a 22% delta hedge trading. Looking at the overnight exposure it would appear to be a new position, which could be the commercial sector adding to upside length or a commercial short looking to use as upside protection. Technically values drive deeper into overbought conditions, however this happens amid firm upside trend strength which provides comfort to hold longs into the move.
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