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Posted by Tango
on November 27, 2018, 7:20 am
Both markets opened with selling and justifiably so as the Real fell sharply yesterday even after our close. But the Real moves are generally being ignored by the coffee markets. Our market reacts to a only small degree compared to moves of the Real. There was activity in the forwards but mostly as a result of commercial buying, likely, as the front month dropped. At the end of the day the buying appeared to be something more than day traders short covering. The behavior of the market does not provide any hint of sustainable direction. It continues to be a market that is recovering from a volatile month and trying to find itself. Today the strength is continuing in both markets but lead mostly by KC. The arb is 37.55 and the JanMar spread traded up to 4 premium. It is now trading at -1. Today’s strength may be attributed to those that did sell into commercial bids and are now covering as the Real corrects. The $ is higher but so is the Real. While many EM markets are down today the Mex/SA currencies are higher. USDMXN is 20.5163 -.0997, USDCOP is 3238.00 -4.50 and the USDBRL is 3.8943 -.0455 (-1.17%). Bond futures dropped abruptly overnight and have been trying to recover. Metals are slightly higher and equities lower and crude is unchanged. Sugar and cotton are lower while cocoa is higher.
Our market continues to slowly climb. The resistance on the upside is much lighter than the support of the downside. As the market rises however resistance does increase and some forward selling has emerged.