Arabica coffee futures rally to 32-month high

Tuesday, October 07, 2014

Arabica coffee futures rallied to their highest level in 32 months yesterday as ongoing dry weather in Brazil increased concerns that harvest levels would be lower. Coffee for December delivery rallied as much as 8.0% higher on Monday, reaching $2.255/lb, a price last reached in January 2012 as forecasts for drier weather for the next ten days sparked fears of drought. Futures eventually ended the session 6.9% higher from Friday’s close as investors took the opportunity to bank short term profits and investors will be closely watching weather conditions with the expectations of persistent drought seeing front month futures add over 16% in risk premium to prices since the start of the month.

Spot gold prices managed to rebound back above $1,200/oz on Monday after intraday dips early on saw the yellow metal pare back towards $1,183/oz. The reversal mimics a similar rally at the start of the year when prices briefly slipped below $1,183/oz which suggests physical buying is resilient around yesterday’s lows as fundamentals become increasingly important on the approach to $1,180/oz. Gold prices were further supported by a weaker dollar as yesterday’s session saw the dollar index give up the majority of Friday’s gains. The dollar saw firm selling pressure throughout the session against major peers as the DXY shed 0.8% to close at 85.928. Activity early on this morning has seen the index open lower before briefly testing levels above 86.00, however, the move higher failed to gain traction with the dollar index currently trading around 85.865.

Platinum prices managed to lift higher yesterday but not before intraday moves on the downside saw losses extend below $1,200/oz for the first time since July 2009. After opening around Friday’s close platinum prices pulled back towards $1,190/oz before buying interest resumed and supported the metal to a close just below $1,250/oz, snapping a four session bear run. The recovery still has a long way to go before prices converge back towards the range that dominated trading in H1 2014. Platinum spot prices are still down over 12.0% since the start of September when key support just above $1,400/oz gave way to intensive selling pressure.

Arabica Coffee futures rally to 32-month high

KCZ4 Comdty COFFEE C FUTURE D 2014 10 07 07 21 18 

Gold prices recover above $1,200/oz

XAU Curncy Gold Spot Oz 2014 10 07 07 34 44

Platinum prices rebound off of 5-year low

XPT Curncy Platinum Spot Oz 2014 10 07 07 55 54

Events for today

CN Market Holiday 

0600

JP

Aug

Leading Index

0700

DE

Aug

Industrial Output

0930

UK

Aug

Industrial Output

0930

UK

Aug

Manufacturing Output

1500

US

Oct

IBD Sentiment

1500

UK

Sep

NIESR GDP Estimate

2000

US

Aug

Consumer Credit

Topics: Gold, Coffee, DXY, Platinum
More from: Kash Kamal