Arabica coffee futures fell for third consecutive day as long players liquidated positions ahead of the first notice day for the July position. The most active contract for September delivery settled 385 points lower at 172.25 cents a pound. The volume reached 68,871 lots including 21,182 switches. The most active nearby switch traded in an ample range between + 170 and – 190. The recent liquidation was evidenced as the open interest contracted 5,365 lots to 175,624 lots yesterday. Good size trades of short calls and long puts added pressure on the futures. The price outlook remained to be darkened by fundamentals. Origin differentials continue weak encouraging again the coffee flows to the board. A global supply and demand balance report released by CoffeeNetwork, foresee a surplus of 6.65 to 7.6 million bags for the 2022-23 season and 6.8 to 9.83 million bags for the 2023-24 season. An increment in global production and decline of the demand’s growth being the main reason. Cert stocks declined by 635 bags to 541,139 bags. Pending grading totalizes 14,427 bags. No grading reported so far. The USDA will publish the World Coffee report tomorrow 3PM.
In London, the Robusta market fell from recent highs influenced by New York price action. The September position closed $44 lower at 2726 a ton, after trading between 2780 and 2683 range. The selling was mainly speculators profit-taking after the market hit record levels of $2,797 a ton the previous week. Concern about El Nino's effects on Vietnam's plantations later in the year continues among traders. Good industry demand and shortages of fresh coffees have kept Robusta prices firm. The Arabica-Robusta arbitrage has fallen to $0.50, a level not traded since late 2020.
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Arabica futures for September delivery closed 465 points lower at 176.10 cents per pound. The drop was mainly caused by long players liquidations when they realized that the low temperatures in Brazil producing areas did not caused any damage to the trees. At the same time hefty selling of the nearby July-September switch added pressure on the prices. The structure went 455 to 85 in a matter of minutes. The near beginning of the delivery period of the July position may have influenced the action. This afternoon, our affiliate CoffeeNetwork released the final revision of the global coffee supply and demand for the 2022-23 season. A surplus of 6,65 to 7.64 million 60-kg bags is expected. To read the full report, please visit Market Intelligence. The certs stocks dropped by 3,553 bags to 541,774 bags. The pending grading increased 2,880 bags to 14,427 bags. No grading has been reported so far. The USDA will publish the global coffee supply and demand on Thursday.
Robusta Sep23 contract settled at $2763 -20 with a 2792/2742 range. Flat price faltered driven by the selloff in the NY structure. KC Jul23/Sep23 saw sustained long liquidation with a total absence of buying. This drove flat price lower which in turn dragged Robusta with it. Even with the softer close we continue to operate at the upper end of the recent 2640/2800 range. Some chunky CSO options trades going through, in particular Sep23/Nov23 40 put CSO trades 900x @ 6, SEP23/NOV23 0 put CSO trades 2800x @ 2, RC Sep23 2900/2800 (2x1) callspread vs sell 2783Δ26 trades 3000x @ 48, RCU3 2200 Put LIVE trades 5500x |
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