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Posted by Tango
on January 3, 2019, 6:50 am
Buying was present in both markets. Selling then came in but was met with downside support. The market is now attempting to remain above 100.00. The depth of market shows that dips are well populated below the current low. Forward buying is sparse but spreads remain on the defensive. The arb which is at 30.65 reflects a relatively weaker KC, even at the highs of the morning. The market appears to be guided by a weaker $ as it appeared to be the case yesterday when the $ was strong, and ignoring the very strong Real, registering a 2.5% drop in the USDBRL. The volume traded was comparatively high yesterday. 23,463 lots traded in May, 20k of which were outright. Major currencies are mixed against the $ with the ¥ jumping 3.7% overnight as Apple cited slower sales and China slower growth. So the ¥ together with gold are considered safe havens. Other metals which are more closely tied to industrials are lower as equities are down sharply overnight. Oil is also down but recovering. Bond futures are flat but higher. Softs are on either side of unchanged.
What will 8:00 bring? It is difficult to say. Yesterday the market again reacted positively from the 100.00 level but as JuanV describes in his comment it could not penetrate the 20ma. Whether the indigenous land news provoked selling or not is uncertain. The issue is not resolved and it would take years to implement. The more immediate question is what will Brazil do to support prices. For now we have a market that appears to be enchanted with the 100.00 price, with good commercial support, mostly options related, and possibly continued fund selling, and waiting for rebalancing activity.