Coffee Review: Falls; Traders Sell On EU Debt Worries

Arabica coffee for July delivery fell Friday, under the pressure of a
rallying U.S. dollar and weak equities market, as traders shed riskier
commodity investments on concern that the Greek debt crisis could spread.

Most active July coffee lost 2.8 cents, or 2%, to end at $1.3430 a pound on
ICE Futures U.S. in New York. Nearby May, which expires Tuesday, fell 2.8
cents, or 2%, to settle at $1.3425.

For the week through Friday, July coffee was essentially unchanged, edging up
0.40 cent, or 0.29%, compared to last Friday's settlement.

Commodity markets withered amid fear that the Greek debt crisis could spill
into other euro-zone nations like Spain and Portugal, sending traders to the
relative safety of the dollar. Speculative fund traders sold commodities in an
attempt to shave riskier bets from their portfolios, brokers said.

"Seeing the dollar rally is not giving the market confidence that coffee can
work higher," said Hernando de la Roche, managing director of coffee trading at
Hencorp Futures in Miami.

In addition to the bearish outside market influence, coffee futures were
pressured by origin selling as top grower Brazil harvests its crop, he said.

The Brazilian harvest is just 10% complete, however, and the vast amounts of
beans won't begin hitting the market for a week or two, depending on the
weather, a trader said.

While Brazil's main coffee-growing regions have seen a cold spell this week,
there's no immediate threat of frost, local weather service Somar said Friday.
The crop still needs warm, dry conditions to bring the bulk of the crop to
maturity.

A widespread frost hasn't gripped Brazil in 10 years.

Despite Friday's wide 4.8-cent trading range, July futures remain locked in a
larger range from $1.30 to $1.40 a pound.

Bullish technical traders this week attempted to take out the May 4 high of
$1.3870 but failed. The inability to pierce this resistance area is a bearish
technical signal and is encouraging chart-based traders to sell, said de la
Roche.

ICE warehouse stocks fell 5,630 bags to total 2.369 million bags, according
to the exchange.

Open interest--the number of contracts outstanding between traders at the
prior day's close--fell 909 contracts to total 135,241 contracts, ICE reported.
Just 30 positions remained open in May ahead of its expiration next week.

Futures volume is pegged at 26,334 lots traded, with 6,069 calls and 4,221
put options traded.


   ICE       Change     Range
May   $1.3425   dn 2.8c   $1.3325-$1.3670
July  $1.3430   dn 2.8c   $1.3310-$1.3790