terça-feira, 8 de junho de 2010

07/06: Slips As Brazil Frost Fears Lighten

Coffee prices slipped Monday as traders sold on expectations Brazil's coffee plantations would emerge unscathed from a recent cold spell.

Nearby coffee for July delivery ended 0.65 cent, or 0.5%, lower at $1.3310 a pound on ICE Futures U.S.

Coffee futures have been trending lower since hitting two-week highs on June 1. Traders bought to avoid risk in light of cold temperatures in Brazil--the world's leading coffee producer and exporter. Frost can damage the trees the coffee grows on.

"The market now is shedding a bit of weather premium," said Luis Rangel, vice president of commodities derivatives at ICAP North America in Jersey City, N.J.

Cold temperatures are not likely to damage Brazil's coffee trees in the near term, according to Meteorlogix, a private forecaster. Temperatures are forecast to average near to below normal through the week in southern Minas Gerais and near to above normal elsewhere in the region, Meteorlogix said Monday.

Gains in coffee prices have been capped on expectations Brazil's coffee will produce a bumper crop. Traders anticipate Brazilian supplies, which are not deliverable against ICE coffee contracts, will help plug the gap from a shortage of high-quality beans. These washed arabicas, which originate in Central America, Mexico and Colombia, are in short supply following a pair of
poor harvests due to unfavorable weather conditions. Coffee merchants use ICE Futures prices as a baseline for discounts or premiums to cash coffee transactions.

Coffee futures posted losses Monday against a backdrop of unsteady macroeconomic cues as uncertainty regarding Hungary's debt stokes contagion fears in the euro-zone area. Though Hungary does not officially use the common currency, the traders continue to flee from the euro to the dollar. A stronger dollar makes commodities more costly in foreign currencies.

Spread trading dominated volume ahead of Friday's July options expiration, Rangel noted. Previous options expirations have weighed on coffee, and the market could target the $1.30 area, he noted. That level is a strong support point for July, as most-active coffee futures have held above that level since mid April.

ICE coffee warehouse stocks decreased by 2,975 60-kilogram bags Monday to total 2.3 million bags, according to exchange data.

ICE coffee open interest--the number of active positions left at the end of the session--increased by 1,084 lots Friday to total 138,232 lots, according to exchange data.

Volume was estimated at 31,256 lots, according to exchange data. In options, approximately 6,612 calls and 1,746 put options traded.

ICE Change Range
Jly $1.3310 -0.65c $1.3255-$1.3365
Sep $1.3460 -0.70c $1.3400-$1.3520

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