Arabica coffee futures although dominated by the spreads for one more session with 15,060 switches, had an active day on a moderate range of 460 points trading a total volume of 53,706. NY market had a slow start attempting to break above Friday’s highs, but the momentum was caped by the weakness in the Brazilian Real and a slightly positive dollar. Tomorrow marks the start of the Fed's first meeting of the year. The market is already pricing in an increase of 25 basis points, but the interesting thing will be to listen to the official announcement, to get an idea if the Fed will leave behind its restrictive policy. The most active contract for march delivery closed with small gain of 50 cents to 170.40 cents a pound. Certified stocks increased 6,945 bags to 852,720. Pending decreased 8,775 to 87,799 bags. Grading today 20,800. Passed 8,775. Failed 12,025 bags.
Robusta MAR23 contract settled at $2037 -16 with a 2043/2029 range. Slow start to the week with flat price struggling to keep the momentum from last week. We are now hovering above some key technical areas and with a pause in momentum up here we may see a slight correction back to test those levels, in particular $2000. Volumes were above average at 11.4k on the most liquid contract with nearly 5k Mar/May spreads trading between 27/36. If this spread continues to soften this will aid a flat price correction. Mar23 2025/1925 put spread vs 2038Δ30 traded 3000x @ 31, May23/Jul23 -55 calls vs 30Δ100 traded 1000x @87
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Arabica coffee futures settled firm Thursday as the strong technical performance attracted solid buying. The most active contract for march delivery closed with gains of 2.85 % or 4.70 cents to 167.15 cents a pound. Volume was significantly higher with 68,937 lots, including 22,625 switches. Coffee prices have been recovering the last two weeks after hitting a 1-1/2 year low at 142.05 on January 11. Indications of a smaller Brazil’s 23 crop have been circulating amid traders supporting the market’s recovery. This week, a report released by Volcafe, projected the Arabica production at 40.5 m bags, down from 49.8 m previously forecasted in June 2022. The increase in certificate stocks that has been putting pressure on the prices appears to have a lower the rate of passing. Since January, of a total of 254,000 bags submitted for certification, only 90,000 (have passed while 164,000 (64%) have been rejected. Technically, the next objective for the March position is at 175. However, oscillators indicting over-bought conditions make the market vulnerable for a correction. Certified stocks increased 7,128 bags to 870,722. Pending decreased 15,531 to 93,574 bags. Grading today 15,531. Passed 7,128. Failed 8,403 bags.
The Robusta terminal builds on recent gains with the speculative community driving levels into residual origin selling resting in May23. This is naturally drawing support into the march/May spread as specs buy into March whilst origin focus is may, forming baseline support at $30 premium. Technically the market remains dynamic to the upside as resistance at nearby averages has now turned support ($1933 basis March23), whilst stochastic still push higher in neutral territory. Indicators would suggest we should expect further upside potential with next key resistance resting at $2043. |
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