The New York coffee "C" market for May delivery settled 10 points higher at 169.80 cents a pound on Thursday. After a little drop early in the session, prices bounced as no significant selling was attracted. At the same time, values neared oversold conditions, and the end of the first quarter of squared books encouraged some short covering. A weak dollar added support to the commodity complex today, as did the currencies of the producing countries. Arabica certificates at the ICE exchange declined by 2,497 bags to 742,894 bags.
The Robusta terminal reverses recent losses as the lack of follow-through in origin selling has prompted a speculative short covering rally, encouraging values to set key resistance resting today at $2224 on May 23 contract. London led the charge through the coffee complex today as spot structure reengaged the upside, with May 23–July 23 lifting $37 to $56 on limited volume. Whilst a layer of commercials rolled into the move below $40 discount yesterday, working exposure in May 23 is still standing at 46,899 lots, leaving plenty of spot management in play. This prompts levels to consolidate between the 20-day moving average of $2138 and the upper Bollinger band average of $2227 on May 23 as participants watch the build in the arbitrage-related long.
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The coffee futures market ended lower on Tuesday, leaving participants disappointed by its technical performance. The most active contract for May delivery settled 315 points lower at 173.75 cents a pound. Volume reached 42,818 lots, including 12,476 switches. There were no fundamental news developments to explain the decline, leaving participants uncertain about future market activity. The bearish sentiment weighed on prices as traders were hesitant to commit to long positions. Going forward, traders will be watching for any news that could sway the market to help them determine the best course of action. Certified stocks were unchanged at 747,853 bags. No coffee is pending for grading.
Robusta reverses intraday gains to end the session nearly 1% lower, following the markets failure to attract a fresh element of buying above the previous high. Immediate buying into both May 23 and May 23/July 23 saw spot structure rally $15 to a $63 premium, with origin returning as firm sellers into both July 23 and September 23. After the initial drive to the upside failed, a constant flow of commercial pressure directed values slowly lower into the later stages as nearby speculative longs covered a layer of exposure into limited bear market support. Technically speaking, upside trend strength has weakened following today’s performance, with oscillators nearing overbought territory. This will place the speculative longs on high alert, as most of the systematic longs will reverse should the market be unable to re-engage the upside trend strength swiftly tomorrow, with initial support resting at $2139 on May 23. |
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