{"id":660,"date":"2019-06-10T17:18:38","date_gmt":"2019-06-10T20:18:38","guid":{"rendered":"https:\/\/comexim.com.br\/?p=660"},"modified":"2019-06-10T17:18:38","modified_gmt":"2019-06-10T20:18:38","slug":"who-will-buy-the-market-after-funds-are-done","status":"publish","type":"post","link":"https:\/\/comexim.com.br\/en\/who-will-buy-the-market-after-funds-are-done\/","title":{"rendered":"Who will buy the market after funds are done?"},"content":{"rendered":"
<\/i><\/span>Voltar<\/span><\/a><\/div>\n\n\n\n\n

Who will buy the market after funds are done?<\/h2>\n\n\n\n

The\nUS future\u2019s bond market has priced a twenty-five-basis point cut of interest rates\nalready at the July Fed meeting and some analysts see a chance of further cuts\nuntil the end of the year.<\/p>\n\n\n\n

After\nthe nonfarm payroll figures for May came out a lot lower than expected (and\nApril number was revised down) investors jumped back in on equities helping the\nS&P500 and the Dow Jones to gain more than 5% in a week.<\/p>\n\n\n\n

The\ndollar index fell sharply on the anticipated easing of monetary policy erasing\nthe gains it had accumulated in the last two months and halting (momentarily)\nthe fall of the CRB, which most of the components fell – except for cocoa, live\ncattle sugar and the recovery of oil (shy compared to what it has lost).<\/p>\n\n\n\n

Coffee\nin New York had days of heavy swings with the July contract trading at US$\n106.15 cents per pound (highest since February) on Tuesday, then sinking more\nthan 700 points the next day.<\/p>\n\n\n\n

London\nhas been following the movements, although to a lesser extent.<\/p>\n\n\n\n

Fundamental Focus<\/h4>\n\n\n\n

Producers\ndid not think twice on the strength of the boards taking advantage of higher\nprices to sell their coffees or fix what they have been rolling forward.<\/p>\n\n\n\n

In\nBrazil internal flow increased significantly not only for coffees being carried\nover from the 18\/19 crop, but also for new-crop (19\/20) and forward ones \u2013 a\nvery disciplined strategy of many.<\/p>\n\n\n\n

The\nnature of the rally of the last two weeks has been proved to be basically a\npartial liquidation of the fund’s short position, as we have seen in the sharp\nfall of the open interest and also reported by the CFTC report.<\/p>\n\n\n\n

At\nFriday’s COT we could also notice that commercial gross-long diminished a lot,\nmostly related to closing out spread positions but likely implying trade-long\nliquidation. One would imagine that industry has not bought much, assuming that\nmany have been comfortably covered and unlikely willing to chase prices higher.\nOrigins and some proprietary desks were the sellers as hedge needs are aligned\nto the improved flow of coffees seen around (commercial\ngross-short).   <\/p>\n\n\n\n

Technically\nthe market is trying to keep itself above important moving averages to confirm\na trend change, but the close today and the fundamental picture that has not\nchanged is perceived to be fragile to hope for much more.<\/p>\n\n\n\n

Funds\nneed to find someone to pass the baton and to continue buying the market\notherwise it puts the market in danger, especially for those who have\nestablished new longs recently.<\/p>\n\n\n\n

In\nfact, it would not be that surprising if the \u201cC\u201d now moves towards new lows\nafter managed-money lighted up their position, which gives them room to\nestablish new shorts with a technical failure on the upside.<\/p>\n\n\n\n

Bulls\nargue that the stronger Real shall prevent further losses, but we should not\nforget that arabica has traded near to US$ 90.00 cents per pound when the BRL\ntraded at levels similar to the current one.<\/p>\n\n\n\n

The\nUSDA released other production estimates this week, this time for Ethiopia,\nUganda, Mexico, Nicaragua, Tanzania and Kenya.<\/p>\n\n\n\n

Individually\nthere are significant variations, in percentage terms, such as the 15% drop\nbetween 18\/19 and 19\/20 in Nicaragua (371 thousand bags less) or the increase\nof 15.37% in Kenya (plus 100 thousand bags).<\/p>\n\n\n\n

At\nthe same time the estimate of 271 thousand less bags produced between the two\ncycles, summing up all the six countries, corroborate to the argument that in\ngeneral the marketplace tends to focus its attention basically at Brazil –\nwhere the 19\/20 harvest will be 5.5 million lower than 18\/19 (also according to\nthe United States Department of Agriculture).<\/p>\n\n\n\n

The\nexpiration of July options this Thursday, June 13th<\/sup>, should have\nlittle influence on a drop in the terminal, but it may scare if prices return\nto near US$ 110 cents per pound.<\/p>\n\n\n\n

Technical\nFocus<\/h4>\n\n\n\n

September\ncontract in NY needs to hold above US$ 99.00 cents per pound not to test 96.50,\n95.00, 92.65 and 90.05. On the upside 102.20 is the first resistance, followed\nby 105.75, then 108.60 and 110.00. London has support at 1425, 1410 and 1356,\nwhile resistance levels are 1468, 1493 and 1511.<\/p>\n\n\n\n

Wishing\nyou a nice week,<\/p>\n\n\n\n

Rodrigo Costa<\/em><\/strong><\/p>\n\n\n\n

Skype: rodrigoccosta10<\/p>\n\n\n\n

WhatsApp: +1 646 468 7091<\/p>\n","protected":false},"excerpt":{"rendered":"

Who will buy the market after funds are done? The US future\u2019s bond market has priced a twenty-five-basis point cut of interest rates already at the [\u2026]<\/span><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[16],"tags":[],"class_list":["post-660","post","type-post","status-publish","format-standard","hentry","category-commentary"],"_links":{"self":[{"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/posts\/660","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/comments?post=660"}],"version-history":[{"count":2,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/posts\/660\/revisions"}],"predecessor-version":[{"id":816,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/posts\/660\/revisions\/816"}],"wp:attachment":[{"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/media?parent=660"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/categories?post=660"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/tags?post=660"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}