Coffee Futures Closed Slightly Higher
Arabica futures settled modestly higher Wednesday. The most active contract for July delivery closed 90 points higher at 197.55 cents a pound. The activity was dominated by switches as volatility attracted good speculative participation. Volume reached 43,812 lots including 10,211 switches. The July/Sept switch ended at 1.35 after trading in a 1.15 /1.40 range. The market is developing a base near these levels. Short profit taking and the proximity to an important area of support that make less attractive speculative selling have been noted during the last two sessions. Open interest decreased 3,806 lots as of yesterday reflecting the profit-taking. A recovery of both Robusta and the cocoa market added some support to the coffee futures today. Fundamentally, the market will remain focused on the harvesting of Brazil’s crop and the weather in Vietnam. Also, according with reports adverse weather in Indonesia could impacts yields. In the coming weeks, the USDA will continue to publish their attaché coffee reports, which will be the first forecasts for the 2024-2025 crop. Commodities were mostly lower today. Brazil’s Central Bank will announce their interest rate decision later in the day. In March, the central bank of Brazil reduced its key Selic rate by 50 bps to 10.75%. Expectation is that another reduction of a quarter-point will be announced. Brent Crude Oil fell 0.63% to 82.64 and Spot Gold Futures also ticked 0.10% lower to 2,311.84. Cert stocks declined 13,750 bags to 687,673 bags. Pending grading added 1,085 bags to 119,937 bags. Robusta Jul24 contract settled at $3,414 with a 3449/3330 range. With the speculative long liquidation taking a breather the market was able to find some sort of equilibrium. Roster buying was noted in light volumes, with them already putting on a fair amount of cover over the recent sessions not as much interest was shown today. Origin selling was noted by a total absence. Volumes were half that of yesterday with only 10k lots trading on the JUL24 contract. Structure remained inline with a 70/80 range on 3.4k lots. Robusta Sep24 3725/3025 fence (to the call) traded 1500x @ 0, Robusta Sep24 3700 calls vs 3305Δ30 traded 500x @ 1287.
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Arabica Consolidates, Robusta Adjusts Down
Arabica futures ended higher on Tuesday as the recent fund liquidation appears to have eased reaching a more suitable level. The July contract settled 145 points higher at 196.65 cents a pound. Early selling put some pressure on the prices, however the market recovered after it failed to attract solid selling. The proximity to a support area and over sold conditions discouraged shorts to add positions, at the same time encouraging short term players to reverse positions. The open interest increased by 1,146 lots as of yesterday, confirming new shorts entering the market. The 194/192 level on the July chart reversed roll offering now good support after a strong resistance area since last January was in place. Fundamentally, the market will remain focused on the harvesting of Brazil’s crop. So far, the dry weather is anticipated to contribute with the harvest and no delay are expected. Preliminary data showed that the country’s coffee exports were 66% higher in April year on year, although official data from CeCafe will not be released until Monday. Cert stocks increased by 14,465 bags to 701,423 bags. Pending grading down 875 to 118,852 bags. A total of 16,065 bags were graded. Passed 14,465, failed 1,600. Robusta Jul24 contract settled at $3,378 with a 3440/3261 range. Market gapped $113 lower this morning with non-commercial long liquidation being the name of the game. With London being shut Monday and NY trading 5.5c lower this was a trigger for big MOO sell clips to come into Robusta. Commercial buying was noted in light sporadic volumes, very similar to previous sessions. Outright volumes were impressive with over 21.5k lots trading on the Jul24 contract alone. Structure remained fairly in line with Jul/Sep seeing a 69/82 range on 5.4k lots. Option market was also extremely busy with highlights shown: Robusta Jul24 3800/3200 fence (to the put) vs 3375Δ50 traded 4000x @ 43, Robusta Jul24 2600 put traded 2100x @ 8, Robusta Jul24 4000/3600 putspread vs 3375Δ22 traded 2000x @ 334, Robusta Sep24 3500/4100 callspread vs 3305Δ24 traded 11000x @ 123. |
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