Arabica coffee for July delivery rose Tuesday, supported by speculative buying linked to fund interest in commodities and boosted further by bullish chart indicators that attracted technical buying.
Most active July coffee climbed 2 cents, or 1.5%, to settle at $1.3615 a pound, near the session peak of $1.3685. Nearby May added 1.7 cents, or 1.3%, to end at $1.3525 a pound.
ICE coffee has posted three consecutive higher closes, all but erasing Thursday's dramatic decline that was linked to a rallying dollar and worries over the potential spread of the Greek debt crisis. A EUR750 billion aid package, backed by the European Union and the International Monetary Fund, helped restore investor confidence and traders began to buy commodities again,
thus boosting coffee, brokers said.
In addition, worries about South American coffee crops, particularly in Colombia, were supportive for futures. The International Coffee Organization maintained its 2009-10 global coffee output at 122 million bags, though it continues to monitor climate changes that could affect the volume and quality of the crops, said Nestor Osorio, ICO executive director.
Erratic weather in South America caused by El Nino has been followed by a "reverse La Nina phenomenon," he explained, which may cause abnormal cooling.
"Climatic problems in some exporting nations don't appear to have diminished, he said Tuesday.
Coffee exports in the first six months of the current 2009-10 crop year totaled 44.7 million bags, down 9.6% from the same period the previous crop year.
Colombian production in the first six months of the year was downwardly revised to 4.5 million bags, a sharp decline from an original forecast of 5.2 million, Colombia's National Federation of Coffee Growers, or Fedecafe, said Monday.
ICE coffee also attracted technical buying after prices pushed through chart-based resistance at Monday's high of $1.3485 and again near 40-day moving average resistance at $1.3500 a pound, said Hernando de la Roche,
Pre-programmed buy orders were activated at these levels, spurring coffee's gains.
ICE warehouse stocks fell 6,638 bags to total 2.39 million bags, according to the exchange.
Open interest--the number of contracts outstanding between traders at theprior day's close--rose 845 contracts to total 137,301 contracts, ICE reported. Just 86 positions remained open in May ahead of its expiration on May 18.
Futures volume is pegged at 16,223 lots traded, with 4,035 calls and 2,093 put options traded.
ICE Change Range
May $1.3525 up 1.7c $1.3405-$1.3650
Jly $1.3615 up 2.0c $1.3360-$1.3685
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