Hot Coffee!
Speculators both large and small were active buyers in Arabica Coffee futures to start the fourth quarter, as a lack of meaningful rainfall in the Coffee-growing regions of Brazil has traders fearful of possible crop damage due to the lack of moisture. Large non-commercial traders were already holding a sizable net-long position before today’s buying spree, with the most recent Commitment of Traders report showing 38,080 net-long positions being held by these traders, up 8,800 contracts as of September 25th. Some origin selling was seen during today’s rally, but not enough to absorb the buy-stops and momentum buying seen this morning. According to private consultants, just over 1/3 of this year’s Brazilian harvest has been sold, with producers continuing to hold onto stocks hoping for higher prices. Should rainfall materialize in the next several days, however, a decline in futures prices may persuade origin sellers to lock in prices while they can. 140.00 is seen as the next resistance point for December Coffee, with support found at 126.50. December Coffee closed at 134.85, up 6.20.
World Sugar futures opened October on a sour note, as speculative accounts were in liquidation mode this morning. Traders reported a large sell order in March Sugar, with trade buyers doing some moderate scale-down buying. The harvest continues in the central-south region of Brazil, with only light precipitation expected this week. Thus far, there’s no news out of Russia as to whether the Sugar import duty will be raised to protect domestic producers who are expected to produce a larger Sugar Beet harvest this season. 9.85 is seen as support for March Sugar, with resistance found at 10.25. March Sugar closed at 9.93, down 0.22.
Mike Zarembski, Senior Commodity Analyst
