Over the last few days we have seen the new highs fail and fall along with the #bullish excitement. Meanwhile we have seen #openinterest rise 4k over the same period, the strongest two day increase since early May.
The shorthand interpretation of OI is that increases of OI on down-market days mean new Spec Shorts and in this case it seems plausible. I have been hearing 2 common refrains that support this:
1) "the Brazilian #farmer is not selling (much) despite excellent prices" - so it seems unlikely that we are getting a lot of hedging here. This may be because the farmer is already well sold for a small crop that has barely started harvesting, or it could be because the farmer is very bullish. Probably both.
2) "we have gone too far, too fast" - Many people in the market are bullish #coffee prices but a rapid rise makes us uncomfortable. Big moves up quickly mean, big moves down are equally possible. We like to see some #consolidation to gain confidence in the direction of price.
I have also seen residual buying in the early morning hours over that last few days which to me suggests small specs are playing catch up a bit, but it will be the #coffeeroasters catching the market if the spec is selling.
It seems unlikely that the Roaster will get enough coverage to be comfortable unless the #market really drops hard over the next week (certainly possible). But once we find support and have some more color on the crop size and quality, then we will have a new potentially bullish factor to content with: spec short covering.