“End of May”
In a week that saw equities suffer, the BRL rebound, China announcing “a Long March” in response to the trade war and Theresa May resigning, the last few days of May are proving volatile indeed.
Having weakened to 4.10 last week, the BRL recovered to 4.03 as some reform measures made it
through some House committees. This, in turn allowed NY Arabica to rebound to the highest level this
month, prompting more physical coffee to flow at origin.
Early chatter of cold temperatures (read frosts) has started to do the rounds, but temps are not really
expected to fall below 5-6 degrees, and restricted to some MG and PA regions at that. Rains are
forecast next week.
In sympathy with Arabica, Robusta prices also tried to rally, encouraging some physical selling from
producers in Vietnam, but diffs nevertheless continued to increase as exporters covered shorts.
The USDA has published its annual Coffee attaché reports, which see y/y coffee output rising 7.8% in Ecuador, 6% in India, 5.2% in Costa Rica, 0.9% in Indonesia, 0.1% in Guatemala steady in Colombia
and down 8.5% in Brazil.
Certified Arabica stocks on NY stand at 2.43 mio bags, while on London they are at 1.2258k lots.
We estimate NY net spec length has reduced to -68k and the Lnd spec length is at -36k lots.
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