Arabica coffee futures for march delivery settled 230 points higher at 151.70 cents a pound. Volume reached 51,572 lots including 14,885 switches. The speculative short covering eased today; however commercial buying supported the prices modestly. During the week Arabica prices lost 4.1%, or 6.60 cents. The breach of the key support level at 155, March position, triggered heavy liquidations that pushed the “C” prices to the lows of more than 1-1/2 year low at mid-week. Market participants continue to be focused on the developing of the Brazilian 2023 crop, now with higher expectative as the weather has improved notably. CONAB will release their first forecast of the crop on January 19th. Other industry estimates will follow, including the first official estimate from StoneX, who is currently conducting their crop tour. The market will be closed Monday in observance of the Martin Luther King Day holiday. The GCA stocks report for the end of December will be published on Tuesday. Certs stocks increased by 5,146 bags to 850,724 bags. Pending grading: 139,161. Grading today: 16,284. Passed 5,146 bags (31.5%). Failed 11,138 bags (68.5%). Since the beginning of the year there has been an increase of 36,038 bags in ICE certificates
The Robusta terminal continues to defy gravity ending the session 2% higher as ongoing fund short covering absorbs a wall of origin selling. This is one of those rare weeks when both ends of the commercial spectrum are happy, as roasters were heavy buyers on Wednesday below $1820 and origin selling into the move above $1880 into the later stages of the week. Sadly, this will not be captured by the latest COT as the activity occurred after the cut of period. Levels have finally breached and settled outside the $1757 - $1893 basis March23 range which has been in play since October. Despite heavy gains, oscillators are still in neutral territory amid solid trend strength, which will grant comfort to the nearby speculative long searching for further gains moving into next week. However, this will rely heavily on the return of fund buying as the market continues to observe solid appetite from the commercial short to add to positions into these gains.
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Arabica coffee futures closed higher today on speculative short covering. The most active contract for March delivery settled 550 points higher at 149.40. A significant increase of the open interest on the previous session, evidenced the amount of new short players added, that were forced to cover as prices rally today. The OI increased 10,219 contracts to 220,388 contracts. The market was poised for a correction to the upside as oscillators showed a market heavily oversold. Additionally, today, the US dollar weakened against most major currencies, including those in Latin America after the US labor department reported consumer prices fell for the first time in more than 2 ½ years in December, suggesting inflation is sustaining a down trend. The real of Brazil recovered to BRL 5.07 , the highest since Nov 7. The market will be closed Monday in observance of the M. Luther King Jr. Holiday. On Tuesday, the GCA US stocks report at the end of December will be published. Certified stocks decreased 4,823bags to 845,578 bags. Those pending certification are at 155,445 bags. Grading today: 14,479 bags 2,698 passed and 11,881 failed.
The Robusta terminal holds key support to end the session 4% higher, help by firm roaster buying observed at the lower end of the day’s range and easing non-commercial pressure. London opened marginally higher at $1817 responding to a mildly positive early macro environment, with traders expecting cooler U.S. inflation data that could prompt the Fed to slow its tightening cycle. Following a brief holding pattern values reengaged the upside as heavy roaster buying prompted a wave of speculative short covering drove values through resistance at $1856 with upside momentum unchallenged until Asian based selling materialised above $1875 so the pace into the closing bell. |
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