Overview
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Macro remains a key driver. The FED’s July meeting minutes sounded a touch less hawkish, which is interpreted by the market as a posssibly softer rate hike come September. Friday COT suggested funds are back to buying agriculture futures due to strong cash markets and the strong BRL.
Robusta saw the second-largest new longs on record (+12,554 contracts) which has a slightly bearish feel as larger-than-expected fund long positions means less fund buying firepower looking forward. New Arabica pending gradings have come to a halt and at the current grading pace and pass-rate, it will not change the bigger picture that much.
Overall, NY at 210cts is in the high side historically speaking but the fundamentals are still bullish (albeit less so than a couple of months ago). LDN did an amazing job at narrowing the Arbitrage, but we suspect that there is a Dead Cat Bounce in the agenda of some main big traders.
