Arabica coffee futures for July delivery closed 125 points lower at 185.50 per pound. The market was under pressure early in the session due to speculative selling following the fall of other commodity markets. The crude oil price fell more than 4.5%, with Brent dropping to $71.50 per barrel. Volume was moderate as participants awaited the FED's announcement of interest rates. Some concerns about the contraction of demand weighed on coffee prices. A significant increase in Honduras exports during April could be attributed to some delayed shipments. Exports during April reached 868,753 60-kg bags, or 48% higher than April 2022, which added 584,063 bags. Total export during this coffee year was 2,879,812 60-kg bags, or 2.5 times higher than the same period the previous season. Arabica certified stocks decreased by 7,819 bags to 663,976 bags. Pending grading remains at 0.
Robusta Jul23 contract settled at $2424 unchanged with a 2455/2404 range. London seemed to hold strong in the early part of the session considering Arabica was under pressure. A lot of the activity today was largely down to macro flows ahead of the FED interest rate decision + conference that will kick off at 19:00 GMT. Once flat price had tested the lows and the selling dried up, we observed a sharp rally as we held key technical levels. Commercial activity was few and far between, which is reflected in the poor intraday volumes. Sep23 2550/2900 call spread vs. 2403Δ24 traded 3000x @ 61, Jul23 2600/2200 fence (to the call) vs 2425Δ43 traded 500x @ 19.
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Arabica coffee futures saw prices recover moderately today with short covering providing the boost. The most active contract for July delivery settled 115 points higher at 186.75 cents a pound. Technical factors were the primary cause, as oversold conditions in the short term discouraged the speculators from further sales. Origin selling have been relatively quiet as Brazil is heading towards the frost season. As a reminder temperature in Brazil coffee areas are expected to cool down a little below 10 C. at the end of next week. Equity and commodity markets were under pressure today on worries about a US default and prospects fuel demand can suffer if the central banks raise the interest rates this week. Brent oil prices fell more than 4.0 % to $75.30. Arabica cert stocks declined 570 bags to 671,795 bags. Pending grading remain at 0.
The Robusta market endured a subdued session as levels bounced between macroeconomic negativity and ongoing reduction in roaster coverage. Values opened marginally lower before dropping $10, led by a wave of speculative based selling responding to expectations of global rate rises prompting potential firming in the USD. However, with a total absence of origin interest the earlier sellers reversed positions to force values into a $2415 to $2430 range basis July23, which remained intact pass the midsession. This lack of direction was awoken when the july23/Sep23 structure weakened to $18 premium, which naturally dragged flat price lower to establish an intraday low at $2391, but similar to the earlier action values failed to attract sellers’ sub $2400 and values bounce back into positive territory into the closing bell. |
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