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Re: COT report as of 1/5/2018

Thank you Juan for a great report. I think that the commercial long liquidation is not unusual. It is likely option related as were their purchases at lower prices. More interesting to me is the new selling by the commercials. We saw the same two reports ago for approximately the same quantity. Is this also option related or is it hedging? The Real has seen sufficient down moves that it may have motivated some selling by producers. There hasn’t been any significant selling in the forward months which is often related to producer selling. In addition to the new commercial selling there was new buying by some managed money funds. These two activities are the reason why we often saw only slight changes in the OI. So now we can see that there is plenty of interest in selling at these levels, longs as well as some new shorts.

In trying to look at the bigger picture, there are key markets, namely metals and oil, that have been on an uptrend. Of course, each market has its own reason to rise or fall. However, we have buying in our market, not only by the robotic systems but also new buying by other managed money. In addition, the Bloomberg Index fund will increase its share in the coffee market this week. There will be a point when the investment community will look at commodities again as part of its portfolio. It seems that with the tax reform measures taken and the anticipation of infrastructure rebuilding that commodities are ripe as an investment opportunity. If so, will coffee be included? Also this week is the Feb option expiration, on Friday.

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COT report as of 1/5/2018 *PIC*
Re: COT report as of 1/5/2018