BLUE LINE = BRLUSD
The market remained quiet and in a narrow range for most of the week as the roll and option expiration took place. On the last day of the COT period, prices broke 130.00 and managed to close above it. Volume was light for outright trading and the market ranged 5.65c, netting an increase of 3.20c.
As we see in the report, 7 funds reversed by covering shorts and buying new while 3 additional funds initiated long positions. Swap dealers and small traders were also buyers while commercials and large traders were sellers. The selling was mostly in the form of long liquidation in both sectors, commercials and large traders, and there was little forward selling that would be expected as prices rose and the Real weakened. Spreads weakened across the board.
The days following the COT period, the market remained steady as funds continued to buy. On Friday, after establishing a high for the week of 135.45 in July, prices dropped on light volume, wiping away most of the gains of the week. It was probably Friday long liquidation that brought prices close to the 130.00 level but the market is not very impressive in its display of strength. The market climbs but in a very laborious and hesitant way as funds buy with a slow pace and longs become eager to sell. Robusta is even a less bullish market than Arabica.
On Tuesday, as the COT period ended, the arbitrage rallied 3c to 69.09, indicating a very lagging Robusta. On Friday the K arb ended at 67.74. On the COT report, Robusta illustrates what an old fashion commodity market looks like. Funds are not of the algo type and commercials commonly buy strength, as shown. In any event, the sentiment in Robusta is not a bullish one. In spite of the reluctance that both markets displays, there are still positive signs.
Of course, we have fundamentals that are threatening the chances of any surplus going forward. In June, we will see what the USDA reports. The Brazil winter is approaching and we may see frost threats. SBUX continues to outperform, closing on Friday at 118.34 +1.68 (+1.44%). The Arabica market is still in an uptrend even though it came very close to Nagual’s potential second shoulder. As the May contract winds down we will get a truer trajectory.
« Back to index