Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
Thank you Juan. Great explanation. The market I feel is not easy to project for the near future. Together with what you covered I try to consider the investment commitment in our market. I know that swap dealers are under the commercial category because their activity is implemented by commercials but in fact they are speculative. GS, Morgan and other institutions are what compose this category and they do represent a long term commitment to the market especially on the long side. Index funds are also committed to the market. Although we don't know what part f this group is options, the majority of contracts are outright futures. Large traders are partially long term because they represent banks to some extent. We see in your report that large traders have again sold out longs. My point in all this is that there is a good percentage of longs that consider Coffee as part of their portfolio. In answer to your question will systems buy after they have covered, it has been my experience in observing the systems that they will continue buying whether as short covering or new longs as long as prices are above the trigger for reversal. Usually this trigger is around 5 cents below the previous close or the day's high, if the reversal occurs intraday. It is my view that systems have now reversed to long. We'll see if the OI provides any hints.
Although the market is difficult to project it continues to behave in a steady mode. For the last 3 days, the market has been sold down only to bounce back to 140.00 on the close indicating that daytraders have been the sole short sellers. Also worth noting is that all the selling that we see by both commercials and other delta sellers we will see if or when the market drops as buyers. In looking at the depth of market, I get the feeling that the next COT report will not be as dramatic as the last few that we have seen.