NEW YORK (Dow Jones)--A London rally jolted arabica coffee prices out of a tight range and up to their highest levels in nearly five months Friday as available world coffee supplies tighten.
July coffee futures settled 7.95 cents, or 6%, higher at $1.4495 cents a pound on ICE Futures U.S. The contract hit $1.4850 during the session, its highest point since Dec. 16.
At the same time, NYSE Euronext Liffe July robusta futures ended $87, or 6%, higher at $1,560 a ton. The contract touched the $1,579 intraday high, its highest level since Oct. 19.
Robusta prices rose 17% this week as speculators, such a banks and hedge funds, bought back previously sold bearish, or short, bets. There was market talk that the rally originated with attempts by a major trading house to exit short positions. On the same note, another note came from a continuous drop in the coffee stocks held in Liffe exchange warehouses for delivery against the futures contract.
Robusta coffee is of lower quality than premium arabica beans. The market continued the week's rally Friday. ICE arabica futures followed suit and charged past recent highs, which triggered short covering from fund and technical traders that rely on charts to plot trading trends. As the contract vaulted through previous highs, it sparked more buying from pre-set trend indicators. Speculative traders also added new bullish bets amid signs that the market's trend had turned. Coffee backed off its highs midday under pressure from sales related to producer-merchant transactions ahead of the harvest, Rabobank said in a research note.
"That's the wakeup call for the market in New York that's been trading in a range," said Luis Rangel, vice president of commodities derivatives at ICAP North America in Jersey City, N.J.
ICE coffee prices have been trapped in a snug 10-cent range since mid-January as little fresh news has been available to offer the market direction. The market has support near $1.30 from a dearth of available supplies of high-quality beans following two consecutive poor harvests in Central America and Colombia. At the same time, coffee prices have been capped near $1.40 from expectations for a bumper crop of beans from Brazil. The arabica harvest there is just starting to pick up speed.
However, the strong rally in the face of a bumper crop expected from Brazil "speaks volumes," one Central American sugar broker said. He indicated the new supplies from Brazil may not have a bearish impact on the market despite traders' assumptions.
ICE coffee warehouse stocks decreased by 413 60-kilogram bags Friday to total 2.268 million bags, according to exchange data.
ICE coffee open interest--the number of active positions left at the end of the session--decreased by 1,077 lots Thursday to total 40,809 lots, according to exchange data.
Volume was estimated at 110,573 lots, according to exchange data. In options, approximately 15,612 calls and 10,342 put options traded.
ICE Change Range
Jly $1.4495 +7.95 pts $1.2570-$1.2570
Sep $1.4610 +7.55 pts $1.2470-$1.2700
-By Holly Henschen, Dow Jones Newswires; 212-416-2138;
holly.henschen@dowjones.com
(END) Dow Jones Newswires
July coffee futures settled 7.95 cents, or 6%, higher at $1.4495 cents a pound on ICE Futures U.S. The contract hit $1.4850 during the session, its highest point since Dec. 16.
At the same time, NYSE Euronext Liffe July robusta futures ended $87, or 6%, higher at $1,560 a ton. The contract touched the $1,579 intraday high, its highest level since Oct. 19.
Robusta prices rose 17% this week as speculators, such a banks and hedge funds, bought back previously sold bearish, or short, bets. There was market talk that the rally originated with attempts by a major trading house to exit short positions. On the same note, another note came from a continuous drop in the coffee stocks held in Liffe exchange warehouses for delivery against the futures contract.
Robusta coffee is of lower quality than premium arabica beans. The market continued the week's rally Friday. ICE arabica futures followed suit and charged past recent highs, which triggered short covering from fund and technical traders that rely on charts to plot trading trends. As the contract vaulted through previous highs, it sparked more buying from pre-set trend indicators. Speculative traders also added new bullish bets amid signs that the market's trend had turned. Coffee backed off its highs midday under pressure from sales related to producer-merchant transactions ahead of the harvest, Rabobank said in a research note.
"That's the wakeup call for the market in New York that's been trading in a range," said Luis Rangel, vice president of commodities derivatives at ICAP North America in Jersey City, N.J.
ICE coffee prices have been trapped in a snug 10-cent range since mid-January as little fresh news has been available to offer the market direction. The market has support near $1.30 from a dearth of available supplies of high-quality beans following two consecutive poor harvests in Central America and Colombia. At the same time, coffee prices have been capped near $1.40 from expectations for a bumper crop of beans from Brazil. The arabica harvest there is just starting to pick up speed.
However, the strong rally in the face of a bumper crop expected from Brazil "speaks volumes," one Central American sugar broker said. He indicated the new supplies from Brazil may not have a bearish impact on the market despite traders' assumptions.
ICE coffee warehouse stocks decreased by 413 60-kilogram bags Friday to total 2.268 million bags, according to exchange data.
ICE coffee open interest--the number of active positions left at the end of the session--decreased by 1,077 lots Thursday to total 40,809 lots, according to exchange data.
Volume was estimated at 110,573 lots, according to exchange data. In options, approximately 15,612 calls and 10,342 put options traded.
ICE Change Range
Jly $1.4495 +7.95 pts $1.2570-$1.2570
Sep $1.4610 +7.55 pts $1.2470-$1.2700
-By Holly Henschen, Dow Jones Newswires; 212-416-2138;
holly.henschen@dowjones.com
(END) Dow Jones Newswires
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