Eoin Treacy's view -
Lowest premium in nine years will spur arabica demand, Julio Sera, risk- management consultant at INTL FCStone in Miami, says in telephone interview.
* “Who’s going to buy robusta if you can get cheaper arabica?”
* Recent sell-off is overdone and gives roasters and other end- users a chance to lock in supplies in coming months, while speculators unwind some bearish bets
* Prices will probably swing widely before end of month, 2Q
* On Thursday, futures spread between arabica in N.Y. and robusta in London narrowed to 24.4c/lb, lowest since Jan. 14, 2008, when Bloomberg data starts; on Friday, premium rose as much as 17% to 28.5c; average in 2016 was 58c
* On Friday, arabica coffee for Sept. delivery jumps 5.4% to $1.2275/lb
* On Thursday, price slumped as much as 5.4% to $1.155, lowest since March 3, 2016
There is a key difference between the CRB Index and the CCI Index or as they are often referred to as the CRB and the Old CRB. The CRB is liquidity weighted so it is heavily influenced by oil. The CCI (Continuous Commodity Index) is unweighted to it should give us a better reflection of investor interest in the commodity sector.
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