Arabica coffee futures had another very slow session. The volume was boosted by 7,969 spreads reaching 33,880 contracts the total traded today. The commodity and equity markets action was lethargic. Lack of news and the World Cup kept traders on the side. The dollar declined as investors bet the FED is near to end
its tightening policy. Investors will focus on the FED interest rate decision that will released next Wednesday. The crude oil fell on growing recession concerns, with the Brent trading at $75.30 per barrel afterhours. The WTI USA crude futures spread returned to contango for the first time since Nov 2020. Arabica certs increased 13,177 bags to 681,698 bags. Pending grading 384,310 bags. grading today 16,852 bags. Passed 13,177, failed Upside trend strength slowed through the course of the Robusta session encouraging technically driven longs to liquidate into the weekend as constant overhead origin pressure and no notable commercial buying set the tone. A settlement below today’s low would most likely trigger a retest of key support at $1757 basis March23, which would be helped by the current overbought conditions. This outright weakness prompted the Jan23/mar23 to spread to weaken $23 to $18 premium as the recent commercial short management slowed, triggering the structural long to reverse amid a backdrop of nearly 10,000 lots of open interest resting at the $40 premium JAN/MARCH CSO call.
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Arabica coffee futures for March delivery settled 150 points lower at 158.70 cents a pound. Without fundamental news the action was driven mainly by short term specs pushing the market down in accordance with yesterday’s weak performance. Activity was moderate. Volume reached 30,419 lots including 7,580 switches. Colombia markets were closed on holiday. Traders are waiting for perspectives and possible estimates of the 2023 Brazil crop as some tours have begun to survey the main coffee areas. The crude oil hit the lows of the year, unwinding all gains made after the Russia invasion to Ukraine. Arabica certified stocks increased 9,691 bags to 668,581 bags. Pending grading declined 9,165 to 395,432. A total of 17,246 bags were graded today. 11,516 passed and 5,730 failed.
Another overnight draw of 128 lots in the Robusta certified stocks reduces stock levels to 7,626 lots, down 900 lots since the start of December. This naturally helps spot structure hold the current premium, with conversations around the market dominated by chatter of Jan23 tightness. Open interest fell 942 which mainly emanated from the commercial short managing spot exposure as nearly all flow out of origin continues to favour March23 and May23.Technically the market continues to operate through a bull trend, straddled by the mid and upper Bollinger band averages. Although values operate in overbought territory, a firm trend strength deters players from countertrading/ selling the move which for now remains intact. However, if values are unable to test the psychological $1900 marker over the near term, upside trend strength will dwindle encouraging a wave of liquidation into year end. |
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