Coffee Futures Closed Higher July24 Arabica options expiration once again did not disappoint today, leaving everyone wondering: what’s next? The day started out with more of the same, futures opened lower and continued with no bid in sight, led by the July24/Sep24 spread that saw a one year low of -1.50. It did not take long for buyers to slowly appear until the action really picked up right before 12 PM EST. The front spread traded from the low of -1.50 to -0.20, before going out at -0.65 on 18,092 lots of volume. July24 futures traded in a 12.35 cent range today from a low of 215.00 to 227.35, settling 3.80 higher at 224.35. Total volume reached 102,794 lots including 30,092 spreads. Now we will repeat what we have been saying since prices started to head lower: now that options are off the board, the market will turn its focus to July24 deliveries. The July/Sep CSO put buyer led the way lower since last week’s high, now someone else has shown their hand. We have four sessions left until First Notice Day on June 20th, as June 19th the market will be closed for holiday.
July24 Robusta coffee futures traded in a $100 range today, opening higher but tracking Arabica lower for most of the session until the NY terminal turned. The underlying fundamental support has kept Robusta prices steadier throughout the Arabica selloff. The July/July arb today fell to 26 cents but came back above 32 for the close. 20,075 total contracts traded today in the London terminal, expect volume and volatility to pick up as we head into options expiration and the delivery period over the next two weeks.
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Arabica Futures Consolidate as Robusta Takes Center Stage
Arabica coffee futures tested the 226-support area one more time in the early hours. The remaining of the activity was driven by the Robusta market, which traded to new highs and allowed the NY market to maintain the lateral move above 230.00 on the main contract Jul24. The volume is still moderate at a total of 67,988 lots, reflecting that most of the activity is switch focused with 23,466 switches traded. Jul24 option expiration and FND are only 5 sessions and 9 sessions away. KC N/U switch traded and settled lower -0.25 at 0.95. Arabica trend above the 8-day moving average this week will keep traders vigilant for further upside action and a retest of the previous high at 237.75. If no interest is found to the upside, the recent short-term traders that added new longs could opt out with a technical signal below the 8-day moving average. Certified stocks increased by 7,945 bags now at 798,683 bags, pending grading decreased by 5.145 now at 13,504 bags. Total graded Wednesday 10,320 bags, passed 8,445, failed 1,875. Robusta Sep24 contract settled at $4322 +138 with a 4336/4120 range. A strong rally off the lows with market breaking above the recent highs, $3 off printing a new ATH base 2nd month. Volumes were strong with over 13k lots trading on the now most liquid Sep24 contract. Nearby structure remains in strong backwardation, Jul/Sep saw a 156/130 range on 7.4k lots. The fundamental picture remains unchanged with nearby tightness particularly out of Vietnam being the leading issue. Robusta CSO Jul24/Sep24 120/70 putspread vs 137Δ22 traded 2000x @ 20, Robusta Jul24 4000/3800 putspread vs 4315Δ12 traded 500x @ 25. |
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