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Daily Coffee Report - 05/21/2024

By: StoneX Coffee Team, Softs Coffee Miami

Coffee Rallies on Fund Buying

 

Arabica futures settled sharply higher today, as funds are presumably returning to the market place.  The active contract for July delivery closed 10.50 cents or a 5.07 % higher at 217.20 cents a pound.  Volume increased to 61,921 lots including 17,439 switches. Gains in the Robusta market supported the prices since early on the session. Despite some moderate rains developed recently in Vietnam, still additional rains will be necessary to recover the soil moisture. The open interest increased by 1,836 lots as of yesterday, in addition to 668 lots on Friday, suggesting that funds could be building up the long position again. Technically, the strong move and breach of resistance levels lured significant speculative participation. In terms of fundamentals, the market continues to digest the release of the USDA attaché reports, including the bullish report that Honduras’ 24-25 crop will remain unchanged from the previous year at 5.5 million, which is still a 24% decline from 22-23. CONAB will release their second survey of the Brazilian coffee crop tomorrow morning. There are already talks of lower-than-expected yields for the Robusta crop now that peak harvesting is underway. Cert stocks down by 2,025 bags to 765,363 bags.  Pending grading remained unchanged at 28,443 bags. No grading reported today.

Robusta July contract settled at $3734 +235 with a 3745/3494 range. A strong breakout largely dominated by speculators jumping on upside momentum re-establishing longs that were liquidated at start of the month. Origin selling was sporadic at best but not enough to absorb the buying. Likewise roasters did not seem to be chasing higher in great volumes. As diffs firm once again in Vietnam and various bullish reports being released today it just added fuel to the fire. Volumes picked up late in the session with a total of 14,7k lots trading on Jul24. Look at the structure it shows no real change with Jul/Sep continuing to operate around the +60 level, 5.6k lots traded between 57/68. Robusta Sep24 4000/4500 callspread traded 2500x, Robusta Jul24 3800/3200 fence (to the call) vs 3645Δ44 traded 1500x @ 81, Robusta Jul24 3500/3250 putspread vs 3640Δ20 traded 400x @ 59.

At the time of writing

USDBRL 5.1145 +0.20%

USDCOP 3816.6 -0.06%

Coffeeorderdesk@stonex.com    

Miami                                                London                                Brazil                           

305-925-4847                                  +44-203-580-6099            +55-11-3509-5426     

ICE Arabica

Volume:

61,921

 

ICE Robusta

Volume:

26,258

 

Brazil Arabica

Volume:

945

Arabica-Brazil Arbitrage

Arabica-Robusta Arbitrage

Arabica Switches

Robusta Switches

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