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3280 views July 19, 2013 posted by Maja Wallengren

MARKET INSIGHT: Sep Arabica Coffee Prices Down 4.85c On July 19 But Up 3.40c On Week

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JULY 19–September Arabica coffee closed down 4.85 cent per pound on Friday after predictable profit taking plunged into profits from the strong gains seen earlier in the week. Prices settled at $1.2270 per pound at the ICE futures exchange in New York after a busy session with concerns over multiple weather problems in the world’s biggest producing country Brazil continuing to dominate market talk, traders said.

The session opened up 0.35 cent and bull-sentiment managed to pull the market back over the important $1.30-barrier for the second day in a row before the buying session lost steem and classic profit taking set in for the rest of the session. Arabica prices, however, ended 3.40 cents stronger on the week-ago level.

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JULY 18–September Arabica coffee closed down 0.40 cent per pound on Thursday after a busy session at the ICE futures exchange in New York with prices settling at $1.2755 per pound. The session opened down 0.45 cent but frantic short covering on multiple concerns over weather problems in Brazil quickly sent the market to a fresh recent high of $1.34/lb, the highest level in almost two months. Buyers in the bull-section of the market tried to keep up with the momentum of the previous last sessions which all closed higher, but failed to hold on to early gains. The market, however, proved “significant resistance” to drop back to the lows seen last week, traders said, and noted that despite an intra-day low of $1.2665/lb the market pulled back up to close almost flat on Wednesday’s session despite rife opportunities for profit-taking.

JULY 17–September Arabica coffee closed up 2 cents per pound on Wednesday after another strong performance at the ICE futures exchange in New York with prices settling at $1.2795 per pound, the highest level in over a month. Growing concerns of a series of problems affecting the new 2013-14 harvest in the world’s top growers Brazil is the main driving force behind the short-covering seen this week in the market. Stay tuned for a special Technical Analysis on current price behavior coming up shortly, here at SpillingTheBeans.

JULY 16–September Arabica coffee prices continued to correct upward on Tuesday at the ICE futures exchange in New York and settled 2.70 cents higher at $1.2595 per pound on concerns over increasing weather problems in the world’s top grower Brazil. Traders said reports Monday from influential Santos-based exporter Comexim that it had cut its forecast for the 2013-14 harvest in Brazil to 49.4 million 60-kilogram bags after signifiant damage to the robusta crop in Espirito Santo was weighing heavily on the market. This, combined with reports of more heavy rains and possibly also frost later this week, was enough to give bulls the momentum to take prices higher. While the Robusta crop has suffered losses of 3.8 million bags, Comexim said, quality from the arabica has been severely affected by heavy rains in June, and further rains will not only continue to damage quality but may also cause delays to shipments.

The market opened up 0.15 cent but was quickly pulled back down by bears taking advantage of profit making from Monday’s strong close. As new reports of weather damage in Brazil hit the market, however, bulls seized momentum and drove prices back up to a fresh intra-day high of $1.2675/lb before eventually closing one cent lower. The close well over the $1.24/lb support level is significant because the market for weeks has lingered in a tug of war over directions, and despite intra-day highs over $1.24 bulls have been unsuccessful to break that level until today.

Many traders say the market is increasingly uncomfortable that recent 4-year-low prices are well below cost of production in growing countries, brewing rising volatility to the fact the funds are still holding near record net short positions of between 9.2 million and 9.5 million bags – or the equivalent of the entire harvest from Colombia.

JULY 15–September Arabica coffee prices corrected on Monday and recovered most of the losses from Friday’s session when a tug of war over market direction between bears and bulls had the market crashed 4.10 cents per pound. Prices on July 15th settled up 3.85 cents at $1.2325 per pound at the ICE futures exchange in New York.
The market opened lower at $1.1930/lb and bears continued to drive prices down until hitting a fresh 4-year-low of $1.1860/lb before buyers got into action and brought the price back up to a high of the day of $1.2410/lb. One physicals trader said “many are uncomfortable about these lows levels as these prices are now well below cost of production” in producing countries.

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  • […] MARKET INSIGHT: Sep Arabica Coffee Prices Down 4.85c On July . JULY 19September Arabica coffee closed down 4.85 cent per pound on Friday after predictable profit taking plunged into profits from the strong gains seen earlier in the week. Prices settled at $1.2270 per pound at the ICE. […]

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