The market continued dropping from the previous COT period and found a base at 125.00. The market was quiet as it prepared for the holidays but, as we see on the report, it was very instructive.
The Robusta COT report showed aggressive fund selling. It followed then that the same would show in the Arabica COT. On the contrary, funds continued buying and did not reverse as suspected. I believe that this is an important and bullish development, from a COT point of view. Even as the market dropped 17.50 cents from recent highs of 142.50 to the lows of 125.00 during the period, funds did not reverse but added.
Other buyers were large traders who covered. Sellers were commercials, including origin, swap dealers and large traders who liquidated longs as well. Index traders remained net flat.
Looking ahead, it appears that the coffee market has found new life. Thre are obviously other factors besides the COT but the strong fund buying should not be discounted. But nor should the commercial selling which can overwhelm the market but, as we see, these corrections have proven to be opportunities for buyers.