Arabica futures for December delivery settled 590 points higher at 163.95 cents a pound, moving away from the back months that closed with gains of between 415 and 325 points. Volume expanded to 78,719 lots, boosted by 22,397 switches. The strengthened of the nearby Dec/March switch attracted solid buying. The switch ended with a premium of +2.20 cents or up 1.80 from previous settlement. Operators have been surprised by the unexpected move and forced to cover shorts. The open interest declined 3,950 lots as of yesterday to 211,821 and since last Friday it has contracted by 8,732 lots evidencing the short covering. In addition, a firm Brazilian Real and Colombian Peso brought some support into the market. Fundamentals remained mostly muted. The rains so far in Brazil have been predominantly light and isolated across the belt and only with the crop estimates expected during the next two months, market’s participants will learn the real impact of the weather and have a better outlook of the situation. Certs stocks were down 10,158 bags to 421,614 bags. Pending none. Grading today 2,240 bags (Brazil). Passed grading 1,280 bags, failed grading 960 bags.
Another dynamic session in the Robusta market as values end the day 3% higher driven by speculative short covering turn systematic buying into thin origin pressure. This continues amid a backdrop of participants discussing low export data released out of Vietnam through September, reflective of the heavy defaults encountered across the region. Structure naturally drives into a deeper premium whilst technically the market drives higher above nearby averages with stochastics showing further upside potential, key resistance still $100 higher. However, today represents an eighth consecutive up day, which could bring a layer of liquidation in front of the weekend. ...
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Arabica coffee futures DEC23 contract trade on a 615-point range between 149.20/155.65 breaking out of the lateral move lower, after 14 sessions the NY market finally trades above the 20 day moving average today at 150.40 and even above the 50 day moving average today at 152.60 after 15 sessions. The main contract Dec23 settle +560 points higher at 154.90 cents per pound. The switch Z/H tightened almost at par with a range between -0.05/-0.60 and a settlement at -0.25. The dollar index recovers from early weakness and extended higher at 106.56, 2 year US government bonds are above 5%. There is no incentive to be short paper with funds triggering short covering after an extended period of oversold levels. Friday Arabica certified stocks decreased by 7,249 bags to 440,773 bags, pending grading at 2,240 bags, No grading today. COT (CIT) Non-commercials decrease long position by 1,011 lots to 31,312 lots long and increase their short position by 985 lots to 55,718 lots short, with a net short position of 24,406 lots in the week to October 10.
Robusta Jan24 contract settled at $2284 +29 with a 2307/2240 range. Market found good technical support on the 200ma around $2235 base Jan24. Coupled with Arabicas strong performance this meant Robusta was able to rally through the upper Bollinger band triggering small, short covering which was met by light commercial selling. Volumes were solid with 11.4k lots trading on the most liquid Jan24 contract. Structure also firmed a touch which still reflects the tightness in the physical market. Nov/Jan settled at 105 trading 3.8k lots between 90/109. Robusta CSO Nov23/Jan24 70 puts vs 105Δ17 traded 3000x @ 5. Robusta Jan24 2000 put traded 750x @ 11. |
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