Arabica coffee for July delivery tumbled Thursday on speculative fund selling as traders continued to shelter themselves from risky investments by selling commodities and equities. Nearby May coffee traded on ICE Futures U.S. lost 4.10 cents, or 2.9%, to settle at $1.3315.
Most active July fell 4.10 cents, or 2.9%, to end at $1.3320 a pound, just off the day's low of $1.3300--the weakest price for the contract since April 28. Most commodities, including coffee, took a hit, as traders bought the dollar amid concern that Greece's debt troubles could spread to other euro-zone nations, all while the European Central Bank failed to offer any new solutions to the crisis.
The ECB held interest rates steady Thursday, and President Jean-Claude Trichet may have agitated the markets when he said that the prospect of a default within the euro zone is "out of the question," a trader said.
Coffee futures had held up relatively well before Thursday's losses, but the decline will likely lead to more selling in the near term, a broker said. "The structure of the coffee market does not support prices that are trading near $1.3300 a pound. Traders are just trying to protect themselves any way they can," he said.
The market incurred technical chart damage, as July coffee fell through key chart support at the 40-day moving average of $1.3535 and also the 10-day moving average near $1.3450 a pound. Bearish traders may now attempt to press prices down to $1.3020--the April 27 low--and also the weakest price since July dove to $1.3000 on Feb. 25.
Fundamentally, physical supplies of top-quality coffee beans remain extremely tight as Brazil begins to harvest its crop but won't kick into high gear until the end of May and into June. The National Commodity Supply Corp., or Conab, estimated Brazil's coffee crop at 47 million, 60-kilogram bags Thursday, much lower than private estimates and a number that likely caused some selling in the market. "We had a number out of Conab today...which nobody is going to believe," said Jack Scoville, analyst and vice president at Price Futures Group in Chicago. Conab traditionally underestimates the crop, said Scoville, and most traders believe the crop size is in a range of 51 million to 54 million bags, he said. While the crop estimate is viewed as too low, it is still 19.2% larger than the cyclically smaller crop of 39.5 million bags last year.
ICE warehouse stocks fell 6,439, 60-kilogram bags to total 2.404 million bags, according to the exchange.
Open interest--the number of contracts outstanding between traders at the prior day's close--rose 1,223 contracts to total 136,185 contracts, ICE reported. Only 211 positions remained open in May ahead of its expiration on May 18. Futures volume is pegged at 23,325 lots traded, with 5,350 calls and 2,928 put options traded.
(END) Dow Jones Newswires
Most active July fell 4.10 cents, or 2.9%, to end at $1.3320 a pound, just off the day's low of $1.3300--the weakest price for the contract since April 28. Most commodities, including coffee, took a hit, as traders bought the dollar amid concern that Greece's debt troubles could spread to other euro-zone nations, all while the European Central Bank failed to offer any new solutions to the crisis.
The ECB held interest rates steady Thursday, and President Jean-Claude Trichet may have agitated the markets when he said that the prospect of a default within the euro zone is "out of the question," a trader said.
Coffee futures had held up relatively well before Thursday's losses, but the decline will likely lead to more selling in the near term, a broker said. "The structure of the coffee market does not support prices that are trading near $1.3300 a pound. Traders are just trying to protect themselves any way they can," he said.
The market incurred technical chart damage, as July coffee fell through key chart support at the 40-day moving average of $1.3535 and also the 10-day moving average near $1.3450 a pound. Bearish traders may now attempt to press prices down to $1.3020--the April 27 low--and also the weakest price since July dove to $1.3000 on Feb. 25.
Fundamentally, physical supplies of top-quality coffee beans remain extremely tight as Brazil begins to harvest its crop but won't kick into high gear until the end of May and into June. The National Commodity Supply Corp., or Conab, estimated Brazil's coffee crop at 47 million, 60-kilogram bags Thursday, much lower than private estimates and a number that likely caused some selling in the market. "We had a number out of Conab today...which nobody is going to believe," said Jack Scoville, analyst and vice president at Price Futures Group in Chicago. Conab traditionally underestimates the crop, said Scoville, and most traders believe the crop size is in a range of 51 million to 54 million bags, he said. While the crop estimate is viewed as too low, it is still 19.2% larger than the cyclically smaller crop of 39.5 million bags last year.
ICE warehouse stocks fell 6,439, 60-kilogram bags to total 2.404 million bags, according to the exchange.
Open interest--the number of contracts outstanding between traders at the prior day's close--rose 1,223 contracts to total 136,185 contracts, ICE reported. Only 211 positions remained open in May ahead of its expiration on May 18. Futures volume is pegged at 23,325 lots traded, with 5,350 calls and 2,928 put options traded.
ICE Change Range
May $1.3315 dn 4.10c $1.3300-$1.3685
Jly $1.3320 dn 4.10c $1.3300-$1.3710
(END) Dow Jones Newswires
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