Arabica coffee futures finished a little higher Thursday at the end of a session with light volume. Volatility sparked up a little as short term specs played both sides of the market. Good support below the 195 level for the March position caused a prompt short covering and a briefly rally to 201.35. The March contract settled 25 points or 0.12% higher at 198.00 cents a pound. The rains forecast for main coffee producing areas of Brazil continue, with some localities in the northern receiving precipitations above normal during the next days. The dollar fell to its lowest level since July, trading the Index below 101, on expectations of reduced interest rates. Cert stocks increased by 11,458 bags to 258,399 bags. Pending declined 13,136 to 9,495. A total of 15,098 bags were graded. Passed 11,458 (Br 8,898, Taz 1,600 Papua NG 960); failed 3,640 (Br 890, Taz 1,250 , Ven 1,500)
Robusta Mar24 contract settled at $2936 +67 with a 2953/2846 range. The Robusta terminal was dominated by structure strength today, with march24/may24 strengthen $40 to $97 premium. This continues to express nearby tightness out of Southeast Asia with defaults still a worry through the sector. Natural sellers are still noted by absence with participants not anticipating a full returning until the end of February 2024, which continues to draw the speculative community to open and hold longs. Robusta May24 2400 puts vs 2848Δ14 traded 500x @ 41, Robusta CSO - Mar24/May24 100 call traded 500x @ 28, Robusta May24 2200 put traded 500x @ 17.
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Arabica coffee futures for March delivery settled 340 points or 1.75 % higher at 197.75 cents a pound. Activity increased as volume reached 35,500 lots including 7,618 switches. A strong technical performance encouraged speculative buying since the opening. As we mentioned yesterday, breaking of the resistance level at 195 for the March position made participants to eye a price objective at 203.90, the high of last week. The active March / May switch remained firm attracting specs to increase positions. In relation to the weather, an area of low pressure will approach the south of Brazil bringing heavy rains and strong rains and also will cause significant precipitations in ES, MG and Alta Mogiana between Dec 31 and January 4th. Cert stocks decreased by 971 bags to 247,912 bags. Pending grading fell by 7,572 bags to 22,671. A total of 7,572 bags were graded. 4,010 passed and 3,562 failed.
Robusta Mar24 contract settled at $2869 +32 with a 2885/2829 range The Robusta terminal continues to operate amid more comfort to the upside as natural sellers are side-lined. This encourages the speculative community to open positions with purchases which they know generates intraday momentum, which naturally attracts the systematic flows to follow the move. However, structure is telling a different story with March24/May24 driving lower touching $55 premium following values reaching $100 premium before the holidays. Most will assign this to normalisation following the explosion in Jan23/March24 before first notice day. Technically the upside trend remains intact and would hold longs into positions for now. If the market is unable to challenge above $3000 basis Mar24 through the remainder of 2023, we are likely to see a technical selloff into year-end due to declining trend strength. |
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