Arabica coffee futures closed lower Wednesday as technical weakness continued to put weight on the prices. The most active contract for December delivery settled 150 points lower at 149.10 cents a pound. Volume reached 48,593 lots including 12,632 switches. The pressure on the September / December switch eased as the open interest for the September position is decreasing ahead of the first notice day, August 23rd. Expectations of ample supplies amid the conclusion of the harvest of the old crop in Brazil and forecasts for beneficial rains for early development of the new crop, added the bearish sentiment. Commodities were mixed today. Brent Crude Oil rose 0.46 % to 83.80. The US dollar Index ended firm after hitting a nine-week high overnight and trading with a lot of volatility that impacted commodity markets today. Certs stocks were unchanged at 514,909 bags. Pending grading 0.
The Robusta terminal tested below both technical support at the lower Bollinger band average and the previous low as macro negativity continues to weigh on the broader commodity sector. However, levels were unable to attract fresh sellers below the previous low $2369 Basis Nov23, encouraging the roaster community to extend further coverage on a scale basis. This coupled with a near structure (Sep/nov) holding gains above $180 premium naturally provide intraday baseline support prompting early systematic sellers to reverse positions into the balance of the session with origin still noted by absence.
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Arabica futures for December delivery closed 510 points, or 3.2%, lower at 152.60 cents a pound. Speculator selling contributed to the decline as demand concerns mount. The Sep-Dec switch ended at -140 after falling during the session to -195 on strong volume of over 15,000 switches. The normalization of the forward curve could has attracted hefty spec participation. The latest financial reports from some of the major coffee companies show that sales have increased, but only because prices have increased and not because of volume. With the lack of transparency in stock data, this is now a very important indicator of slowing consumption. In Brazil, the 2023 harvest is nearing completion, and the latest forecasts show good rains arriving to the producing regions by the next week, indicating a timely start to the rainy season, and promising a possible good development of the new crop. Technically, breaking the support at 155 represents a very bearish signal for prices. The next support could be against the 145 level. The US dollar also rallied to a more than a month high this morning, adding additional pressure to the commodity complex. Brent crude oil fell 0.99% to 85.95 and gold futures were also down 0.49% to 1,904.47. Certified stocks dropped 6,564 bags to 514,305 bags.
Robusta Nov23 contract settled at $2436 -81 with a 2538/2434 range. Robusta was certainly dragged lower by the Arabica market today, light stops triggered below the 40ma 2489 base X23, algos selling weakness. General commercial flow was fairly muted with roaster buying seen scale down on the Nov23 contract forward. Light origin selling was seen in the morning but certainly was not chasing the market lower. Sep23 shorts continued to roll forward, a bulk of which going into Nov23, that spread saw a 150/189 range on 5.9k lots. Robusta Sep23 2900 call TRADES 2000 times @ 1, Robusta Nov23 2650/2900 call spread vs 2520Δ22 trades 2000 times @ 48 |
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