Week Comentary – The Arabica coffee maturity Jul/10 ended with 45 points lower on the week

Monday, July 12, 2010

The Arabica coffee maturity Jul/10 ended with 45 points lower on the week working in the range of 1,035 points, making the minimum at 156,85 and maximum at 167.20, closing quoted at 163.85 on Friday, with 175 points positive. Marked by a shortened week due to the American national holiday, the coffee price began the week with a strong downward trend, the fact that, when broke the 160,00 levels, stops activations led to record the lowest movement grain at 156.85, where then noticed a strong purchases defense by funds and specs, broke again the 160,00 resistance. In subsequent sessions, marked by a week of August options expiration, oscillation was observed when then the coffee tried the first strike at 162.50 and a new strong upward movement, sought to the maximum movement at 167.20, close to the 167.50 strike, when found some selling scale, closing with a slight depreciation. On today´s session 1 notice was delivered, totalizing during the period 617 notices. According to Cecafé, July coffee shipments (from 01 to 08) totalized 290.522 bags, an increase of 101.4% over the same period the previous month.

Arbitrage Comentary

The coffee market worked most of the week with a realization movement, reaching the minimum at 156.85, where we found an arbitrage decline, but defense position by funds and also upon the August options expiration. The market recovery some of the losses, coming to back to work to 160,00 to 165,00 range. This week, the Arbitrage worked as followed. Sep10/Sep10 from -19.00 to -22.00; Sep10/Dec10 from -19.30 to -22.00; Dec10/Dec10 from -19.30 to -22.00.

Technicall Analysis

The coffee futures in New York closed with 175 points higher. This week we saw new movement with a strong technical correction. However, the volatility and uncertainty prevailed in the market and it rose again closing up at 160.00 cents basis set10. Remains in the upward movement and believe that further falls could occur next week rolls by virtue of the funds. Major support now at 160,00 and then at 157.00 cents and main resistance at 166.00 cents and then at 167.50 cents basis set10.