In the change of contracts, amid the rollovers of the December/19 position, arabica ends up retreating, in a typical movement of adjustment on ICE Futures US. The March/20 position moved slightly off the top at 113.30 cents per pound, but respects the graphical resistance around 200 periods and keeps operating above the level of 110 cents. In general coffee sustains much of recent earnings and remains in a positive technical environment.
The rollover from the December/19 position, given the proximity of the first physical delivery notice day on November 20th, helped set the market tone last week. The March/20 contract came from 95.80 cents, the day’s low on October 18, to reach 113.30 cents at last Friday’s high. It closed this Wednesday at 111.15 cents, sustaining 16% gains since mid-October.
This behavioral change in the foreign market stems from the correction of bearish exaggerations and technical impulse. The market witnessed a strong selling wave in the post-flowering period in October in Brazil. Sales by funds were exaggerated, boosting future adjustments. And as resistances were overcome, coffee was gaining technical momentum. ICO’s data indicating a surplus of 500,000 bags in the 19/20 season helped take away short-term focus, contributing to price improvement. On the other hand, a calm flow and the prospect of a record crop in Brazil in 2020 hold back the bullish momentum.