Long liquidation - still no new shorts as longs opted to take profit yesterday and origin still waiting to see how high we can go. Market now will be consolidating between 180 and 195 looking for direction. A break above will take us to 206-207, a break below down to 170.Yesterday 10k bags showed up in pending grading split between Antwerp and Hamburg. Will watch if more coffee continues to come in could take some air out of the spreads which have stalled recently. Equity markets came under pressure today after inflation data came out higher than expected. January PCE index +5.4% year over year, market consensus was +5.0%. U.S. 10 Year yields are trading today at 3.95%, well above the January low of 3.374%. Robusta MAY23 contract settled at $2151 -10 with a 2174/2134 range. Choppy day with no clear direction, lower high & lower low. Spreads remain firm, MAY/JUL had a 11/14 range on 2.5k lots. Flat price volume was also low with only 7.4k lots traded on the most liquid contract May23 .No notable option trades.
Certified stocks for today stand at 800,137 bags, pending 10,412 bags. There was no grading today.
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Arabica coffee futures for May delivery fell 365 points to settle at 189.70 cents a pound due to long liquidations. As the funds short covering eased, and without any solid buying that could support the market, participants opted to take profit considering also the overbought condition of the prices. Activity was moderate with volume reaching 39,229 lots, including 10,341 switches. A possible near term supply tightness kept the near structures with premium. The forward curve remains with backwardation until the December. Cert stocks 809,566 total with a first increase in a while in the pending grading by 10,412 bags. Certified stocks decreased by 5,400 bags.Open Interest -56 Total 196,072. Short Covering, but is the short covering over? Brazil came back online today after the holiday so we can count on some origin selling at these levels. What is yet to be seen is whether specs choose to sell or go long here.
Key technical levels now to the upside are 195 and the 206-207 region. Support at 183 and 172-170. Tomorrow’s action will be a better indicator of market sentiment for the following week. Options were quiet today nothing notable. Spreads have stalled out since Tuesday: K/N today trading down to 1.30. |
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