30/07: Soars To Fresh 12-Year High As Funds Buy

NEW YORK (Dow Jones)--Coffee prices soared to fresh 12-year highs Friday, driven by speculative fund buying.

Nearby coffee for September delivery ended 3.25 cents, or 2%, higher at $1.7630 a pound on ICE Futures U.S., it's strongest settlement since February 1998.

Coffee prices have risen 6.5% this week. This is the latest leg of a 17% rally that took off in mid-June. Two years of poor weather have hampered production of high-quality arabica beans in Colombia and Central America, the leading sources of that premium coffee. Those beans won't be available until late fall, when harvests begin there.

In the meantime, supplies from Brazil, the world's top coffee producer, have helped fill the gap, but now producers there are holding onto supplies on hopes that prices will climb. Brazilian green coffee exports rose to 1.64 million bags in July, up from 1.47 million in June, according to the Brazilian Green Coffee Exporters Council, or Cecafe. Coffee trade in Brazil saw a lift from the New York rally but activity remained light in the last week, as much of the early crop has been sold and as producers await higher prices, traders there said.

Coffee and most commodity prices got a boost Friday as the weaker dollar sustained speculative interest in commodities. Contracts are less costly in other currencies when the greenback is down. Lower-than-expected U.S. economic growth sparked dollar weakness during the session.

"The market jumped because of very good buying from funds and specs," said Hernando de la Roche, managing director of coffee trading at Hencorp Becstone Futures in Miami.

Coffee futures trading has been volatile in recent weeks as fund traders look to technical charts and macroeconomic cues for direction, as well as coffee's bullish fundamental picture.

Prices are likely to trade within a range of $1.57 to $1.77 in the near term, said Sterling Smith, market analyst with Country Hedging in St. Paul, Minn.

Prices for robusta coffee on NYSE Liffe hit a two-year high Friday. Liffe September coffee settled $63, or 4%, higher at $1,810 a metric ton. Fund buying on top of declining stocks supported that market similarly, analysts there said.

ICE coffee open interest--the number of active positions left at the end of the session--increased by 2,492 lots Thursday to total 169,979 lots, according to exchange data.

Volume was estimated at 28,236 lots, according to exchange data. In options, approximately 10,009 calls and 7,643 put options traded on the floor.

ICE Change Range
Sep $1.7630 +3.25c $1.7265-$1.7875
Dec $1.7680 +3.05c $1.7320-$1.7935

29/07: Rallies 3.4%; Charts, Commodity Strength

Arabica coffee futures for September delivery rallied 3.4% Thursday on broad-based speculative fund buying in commodities, bullish chart signals and continued tight stocks of top-quality arabica beans.

Nearby September coffee rose 5.65 cents, or 3.4%, to settle at $1.7305 a pound on ICE Futures U.S. in New York. The contract reached a high of $1.7460--its strongest price since June 24.

The climb was spurred mainly by technical buying once prices bust out of former chart resistance at $1.7000 a pound, where pre-programmed buy stops were activated, a New York-based broker said.

Coffee futures hadn't topped $1.7000 since June 28, creating pent-up buying interest above the market. Fund participation in coffee, which had been negligible in recent weeks owing to the market's seasonally slow summer period, was reignited by the bullish move.

"The funds took a little bit of profit in the last week or two, but they are having their way with coffee now," said James Cordier, analyst and president of Liberty Trading Group in Tampa, Fla.

Coffee prices continue to be underpinned by tight stocks of top-quality arabica beans, which won't be replenished until the fall, when Colombia and Central America begin their harvests. Colombia is the world's largest grower of mild washed arabica beans. Adverse weather last year cut Colombia's 2009 output by 32% and led to short crops throughout those regions. Though Colombian output is expected to rebound this year, pipeline supplies remain extremely tight.

"In September and October we're going to get some relief from the tight stocks, but until then there aren't any high-quality arabica beans that are going to just come out of the woodwork," said Cordier.

The arabica harvest in Brazil--the world's largest coffee producer--was 58% complete as of July 21, up from 53% in the comparable year-ago period, local agricultural consultancy Safras & Mercado said.

While the Brazilian coffee harvest progresses, aided by dry weather, aggressive origin selling in coffee has remained at bay, allowing futures to climb, the broker said. Brazilian beans aren't deliverable against ICE coffee futures, however, because they don't meet current exchange specifications.

The coffee rally was aided by gains in the commodity indexes. A weak U.S. dollar and a better-than-expected weekly jobless claims report sparked fund buying nearly across the board as traders added riskier bets to their portfolios on ideas economic activity may increase.

ICE September coffee came within 1.9 cents of hitting the 12-year high of$1.7650 established June 24.

The strong close is expected to set the market up for further gains, where bullish traders will likely target a new 12-year high above $1.7650, said Cordier.

ICE warehouse stocks fell 5,640 bags, to total 2.115 million bags, the exchange reported.

Total open interest on ICE rose 1,111, to 167,487 contracts.

Volume was pegged at 29,293 contracts traded, with 10,763 calls and 7,613 put options traded.

ICE Change (cents) Range
Sep $1.7305 up 5.65 $1.6645-$1.7460

Dec $1.7375 up 5.40 $1.6740-$1.7540

28/07: Prices Climb On Buying Of Soft Commodities

Arabica coffee futures for September delivery climbed Wednesday, lifted by speculative buying that took nearly all soft commodities higher.

Nearby September coffee rose 3.65 cents, or 2.2%, to settle at $1.6740 a pound on ICE Futures U.S. in New York.

"The advance was a combination of technicals and the fact that markets like sugar and cocoa also went up, so the soft commodity complex was higher as a result," said Hernando de la Roche, managing director of coffee trading at Hencorp Futures in Miami.

Coffee futures continue to derive underlying support from the lack of top-quality arabica beans in the market ahead of the Central American and Colombian harvests, where most of the mild washed arabica beans are grown.

Much of Wednesday's trading was centered on charts, however, as bullish participants pushed prices toward the high end of the trading range. Even so, coffee futures remained within recent parameters.

September coffee reached a session and 1 1/2-week top of $1.6810 on the buying interest. Prices could gain further, though strong resistance is expected to develop as coffee nears $1.70 a pound.

"We're still in that trading range from $1.55 up to $1.70," said de la Roche.

A lack of aggressive origin selling in coffee is allowing prices to rise. Only small amounts of selling pressure have been seen from the ongoing Brazilian harvest.

Conditions across Brazil's coffee areas are mostly dry, allowing producers to make rapid harvest progress. The crop is also benefiting from a lack of potentially damaging cold temperatures.

ICE warehouse stocks 3,471 bags to total 2.127 million bags, the exchange reported.

Total open interest on ICE fell 406 to 166,376 contracts.

Volume was pegged at 14,644 contracts traded, with 5,867 calls and 3,489 put
options traded.

ICE Change (cents) Range
Sep $1.6740 up 3.65 $1.6365-$1.6810
Dec $1.6835 up 3.60 $1.6435-$1.6900

27/07: Falls On Economic Concern, Weak Charts

Arabica coffee futures for September delivery fell Tuesday on bearish charts and weak commodity indexes linked to renewed economic concerns.

Nearby September coffee lost 1.85 cent, or 1.1%, to settle at $1.6375 a pound on ICE Futures U.S. in New York.

Coffee futures declined, along with a drop in crude oil and precious metals, on weaker-than-expected reports on consumer confidence and regional manufacturing. Commodity indexes declined amid the shaky U.S. economy and helped to put a small dent in coffee.

While coffee prices were influenced mainly by a weaker chart outlook, the latest economic news kept already nervous investors on edge, said Rodrigo Costa, vice president of institutional sales at Newedge in New York.

Consumer confidence fell to 50.4 in July, its weakest level since February, from 54.3 in June, the Conference Board said Tuesday. The data, combined with a weak reading in the Richmond-area manufacturing sector, led to ideas of decreased demand and most commodities, including coffee, fell.

Technical factors also tugged coffee lower as the market continues to retrace after peaking at $1.6760 last week but securing no follow-through buying interest.

In addition, a lack of fund participation in coffee, as traders take summer vacations, allowed prices to drift lower, said Costa.

Despite the decline, coffee futures continue to derive underlying support from tight supplies of top-quality arabica beans. Supplies aren't expected to loosen until the fall when the Central American and Colombian harvests begins in earnest.

Mild selling pressure may have come from the ongoing Brazilian harvest, where producers had picked 58% of the crop as of July 21, data from agricultural consultancy Safras & Mercado showed this week. Safras pegs the total 2010-11 Brazilian crop at 54.6 million bags.

Total open interest on ICE fell 5,231 to 166,782 contracts.

Futures volume is pegged at 12,967 contracts, with 6,324 calls and 2,780 put options traded.

ICE Change (cents) Range
Sep $1.6375 dn 1.85 $1.6320-$1.6655
Dec $1.6475 dn 1.80 $1.6410-$1.6730

26/07: Slips On Mild Retreat From Highs

Arabica coffee futures for September delivery posted modest losses on chart-based selling as prices retreated slightly from the recent rally.

Nearby September coffee lost 0.40 cent, or 0.24%, to settle at $1.6560 a pound on ICE Futures U.S. in New York. September rallied 3% Friday, buoyed by tight supplies.

Futures were held to a sideways trading pattern and narrow ranges amid a quiet news front, an analyst said.

"The market kind of chugged sideways with Europe just starting their summer vacation season with no real weather concerns coming from South America," said Sterling Smith, analyst at Country Hedging in St. Paul, Minn.

The Brazilian coffee harvest continues to progress, with 58% of the crop picked as of July 21, aided by mostly dry weather, agricultural consultancy Safras & Mercado said. This is up from 53% harvested in the comparable year-ago period.

Producers harvested 23.9 million bags of arabica beans out of an expected total crop of 41.5 million, Safras said. Robusta coffee, which is often blended with other beans, comprises the remainder of the crop.

The Brazilian harvest has also been sped along by high prices that spurred farmers to take advantage of the premiums.

Safras pegs the total 2010-11 Brazilian crop at 54.6 million bags.

Coffee futures continue to find support from ongoing tight arabica supplies and strong demand for quality coffee. Adverse weather hurt the Central American and Colombian coffee crops last year, exerting heavy pressure on supplies of top-quality coffee. Those crops are expected to rebound this year, but supplies will remain tight until their harvests begin in the fall, brokers have said.

ICE futures have established a higher trading range with arabica supplies remaining tight, with $1.55 representing cheap coffee and $1.75 being the high end of the range, said Smith.

The Vietnamese government estimates that coffee exports in July will rise 70% from year-ago levels to 1.5 million 60-kilogram bags. So far in the crop year that began Oct. 1, Vietnam has exported 17.08 million bags of coffee.

Total open interest on ICE rose 3,085 to 172,013 lots.

Volume is pegged at 21,477 lots traded, with 3,753 calls and 3,209 put options traded.

ICE Change (cents) Range
Sep $1.6560 dn 0.40 $1.6425-$1.6720
Dec $1.6655 dn 0.15 $1.6500-$1.6800

23/07: Prices Rise As Supplies Dwindle

NEW YORK (Dow Jones)--Coffee prices climbed Friday as tight physical suppliestriggered buying on bullish trend cues.

Nearby coffee for September delivery ended 4.30 cents, or 3%, higher at $1.66 a pound on ICE Futures U.S. The contract has risen 5.5% since July 21.

Coffee is trading in a production deficit as two seasons of poor harvests from Colombia and Central America have left allowed stocks of the high-quality coffee produced there to be depleted.

"We just don't have enough physical coffee to push the prices down," said Luis Rangel, vice president for commodities derivatives at ICAP Futures in Jersey City, N.J. September futures could rise to $1.70 next week, Rangel said.

Speculative traders, like banks and hedge funds, are attracted to the market as its potential to rise is reflected in technical charts. Futures held relative lows near $1.55 early in the week, signaling that demand was strong and prices were likely to rise. At the same time, there are few beans to sell to counter gains in the market.

"Coffee has a huge amount of speculator interest right now," says James Cordier, founder of OptionSellers.com in Tampa, Fla. "Open interest is just ballooning."

Cordier said coffee prices will rise toward $1.68 and $1.69 during August, though sales from Brazil are likely to block ascent beyond that point.

Brazil is the world's leading coffee producer. Coffee roasters have been substituting Brazilian coffee in recent years amid lack of the high-quality arabica beans produced in Central America and Colombia.

ICE coffee open interest--the number of active positions left at the end of the session--decreased by 279 lots Thursday to total 168,928 lots, according to exchange data.

Volume was estimated at 22,756 lots, according to exchange data. In options, approximately 9,432 calls and 3,411 put options traded on the floor.

ICE Change Range
Sep $1.6600 +4.30c $1.6045-$1.6760
Dec $1.6670 +4.40c $1.6115-$1.6805

Brazil Coffee Trade Sees Uptick As Prices Climb

SAO PAULO, Jul 22, 2010 (Dow Jones Commodities News via Comtex) -- Brazil's coffee trade saw an uptick on Thursday as international and local bean prices climbed.

Nearby September coffee on ICE Futures U.S. jumped 4.40 cents, or 2.8%, to settle at $1.6170 a pound on Thursday on speculative fund buying linked to bullish chart factors and a widespread commodity rally.

This upswing followed days of world prices plunging downward, to five-week lows on Wednesday.

"Trade in Brazil only picked up as prices rallied late on Thursday," Harris Haase, a trader at coffee exporter Comexim in Santos, told Dow Jones Newswires.

Buying and selling in Brazil, the world's largest coffee producer, has been slow this week as international and local coffee prices fell, Haase said.

Haase said a good arabica coffee, type six, in southern Minas Gerais state, the No. 1 coffee-growing region, on Thursday was trading at between 300 Brazilian real ($170) and BRL310 per 60-kilogram bag. This compared to BRL300 per bag earlier in the week and BRL320-BRL330 per bag a week ago.

Trade remained light, however, as buyers and sellers in Brazil remain cautious due to a raft of conflicting indicators. Favorable weather in Brazil for its cyclically large coffee crop potentially should trim prices.

Continuing concerns about Central America and Colombia's crop size and the razor-tight supply of fine mild coffees should elevate prices. External factors such as economic uncertainty also further cloud the picture.

Gil Carlos Barabach, a coffee analyst at Safras, said trade remains light this week. Trade was done on Thursday at around BRL305 per bag, after the ICE market hit lows on Wednesday, he said.

Trade for scarce fine washed coffees was being done at BRL360 per bag on Thursday, Barabach said. But the supply remains tight.

Brazil's farmers have harvested more than 50% of the arabica beans and as a result they are well capitalized. "They can afford to wait and see if prices improve," he said.

A trader at Swiss Coffee House in Minas Gerais state said a good Swedish arabica coffee saw buyers hunting for differentials of 26-28 points under the December coffee contract on ICE. Sellers wanted 21-22 points under the same contract, with little trade being done, he said.

The Brazil coffee harvest began in May and will run through September.

Brazil is the second-largest coffee-consuming country, behind the U.S.

Colombia 2H Coffee Output Seen At 6M Bags - Fedecafe

BOGOTA, Jul 22, 2010 (Dow Jones Commodities News via Comtex) -- Colombia's coffee output in the second half of this year will likely reach 6 million sixty-kilogram bags, the General Manager of Colombia's National Federation of Coffee Growers, or Fedecafe, said Thursday.

"We still look at output with optimism and we expect output to be much higher than in the first half of the year," Fedecafe's top official, Luis Genaro Munoz, told reporters Thursday.

Output in the first half of this year was 4.0 million bags.

Finance Minister Oscar Ivan Zuluaga said the total output for this year will likely reach 10 million bags. Earlier this month, Munoz had said the output would be between 10 million and 10.5 million bags.

Munoz also said both the general price of coffee and the price of mild Colombian coffee will stay stable. He said the market would absorb the expected increase in Colombia coffee supply without impacting prices as the demand for coffee is rising faster than output.

The gap between global demand and supply is likely to be around 5.8 million bags this year, he said.

Inventories around the world are at a record low.

Colombia is the world's largest producer of mild washed arabica coffee. Total output had fallen 32% in 2009 compared with 2008 to 7.8 million bags. Colombia was the fourth-largest producer overall after Brazil, Vietnam and Indonesia in the 2008-09 crop cycle.

22/07: Rises On Weak Dollar, Commodity Gains

Arabica coffee futures for September delivery gained 2.8% Thursday on speculative fund buying linked to bullish chart factors and a widespread commodity rally.

Nearby September coffee rose 4.40 cents, or 2.8%, to settle at $1.6170 a pound on ICE Futures U.S. in New York, near the session peak of $1.6195.

Traders attributed part of the gains to a chart-based bounce, after nearing five-week lows Wednesday, but holding above key support at $1.5540 a pound. The ability to hold above this level attracted technical buying to the market, said Rodrigo Costa, vice president of institutional sales at Newedge in New York.

Commodities, including coffee, were underpinned by a weak U.S. dollar, which uncovered speculative fund buying across the futures markets.

Triple-digit gains in equities were also supportive as investors reacted to a better-than-expected report on U.S. housing and a pickup in euro-zone activity. Investors added riskier commodity bets to their portfolios as a result.

Existing home sales fell 5.1% in June, to an annual rate of 5.37 million, the National Association of Realtors said Thursday. Economists had expected sales to decline by 8.1%, to a 5.20 million rate.

Traders were also buying back previously sold positions in coffee, adding momentum to the rally, said Costa.

Fundamentally, coffee remains underpinned by tight nearby supplies of arabica coffee beans due to adverse weather last year and short crops in Colombia and Central America. Those crops are on the rebound, however, at a time when coffee demand continues to run strong.

Coffee output in Colombia in the second half of the year is expected to reach 6 million 60-kilogram bags, up from 4 million bags in the first half, Luis Genaro Munoz, general manager of Colombia's National Federation of Coffee Growers, or Fedecafe, said Thursday.

The coffee market is expected to absorb the expected increase in Colombian production without impacting prices as demand is rising faster than output, said Munoz.

Colombia is the world's largest producer of mild, washed arabica beans. In 2009, production had fallen 32% due to adverse weather.

Technically, September coffee needs to hold above the June 18 low of $1.5540 to avoid further losses. Additional support is uncovered near $1.5500, which coincides with the key 40-day moving average on the daily charts.

ICE warehouse stocks continue to decline, falling 2,811 bags to 2.134 million bags.

Total open interest on ICE fell 1,672, to 169,207 lots.

Volume is pegged at 16,294 lots traded, with 7,677 calls and 1,884 put options traded.

ICE Change (cents) Range
Sep $1.6170 up 4.40 $1.5760-$1.6185
Dec $1.6230 up 4.25 $1.5835-$1.6260

21/07: Downtrend Continues On Charts, Weather

Arabica coffee futures for September delivery fell Wednesday, giving up early gains, on continued technical selling and as conditions remained favorable for the Brazilian harvest.

Nearby September coffee fell 1.25 cent, or 0.79%, to settle at $1.5730 a pound on ICE Futures U.S. in New York.

"Upside momentum that we had seen in recent weeks just kind of died out," said Boyd Cruel, senior softs market analyst at Vision Financial Markets in Chicago.

Traders are reducing the number of bullish bets in coffee and the market's open interest continues to decline, he said.

Outside pressure resulted from a strong U.S. dollar and losses in equities.

Coffee futures have lost 7.4% since reaching a high of $1.6980 Friday, on a combination of technical selling and as fair weather aids the ongoing Brazilian harvest. Worries over the U.S. economy have also hurt the market as bearish comments from Federal Reserve Chairman Ben Bernanke Wednesday and a string of weaker-than-expected economic data have rattled investors and led them to reduce exposure to riskier commodity bets.

Bernanke called the economic outlook "unusually uncertain," a comment that shook the markets, even though he also said that the Fed was willing to take more action to spur growth.

Increased speculation of a double-dip recession has plagued the markets and led to selling in commodities on ideas that future demand will be hurt as the economy continues to suffer.

In addition, coffee has fallen on mostly dry weather throughout Brazilian growing areas, allowing the harvest to continue with no threat of frost, traders have said.

Producers have harvested about 40%-50% of the Brazilian arabica coffee crop.

Since September coffee broke support at the July 6 low of $1.5685, bears will now target the $1.55-$1.54 area, said Cruel.

ICE warehouse stocks continue to decline, falling 2,998 bags to 2.136 million bags.

Total open interest on ICE fell 1,033 to 170,879 lots.

Volume is pegged at 16,209 lots traded, with 3,546 calls and 4,034 put options traded.

ICE Change (cents) Range
Sep $1.5730 dn 1.25 $1.5580-$1.6075
Dec $1.5805 dn 1.25 $1.5660-$1.6150

20/07: Falls On Technical Sales, Brazil Weather

Falls On Technical Sales, Brazil Weather

DOW JONES NEWSWIRES

Arabica coffee futures for September delivery lost 3.2% Tuesday on chart-based selling and as weather conditions remain favorable for the Brazilian harvest.

Most active September coffee fell 5.25 cents, or 3.2%, to settle at $1.5855 a pound.

Nearby July coffee, which expired Tuesday and added to the market's volatility, lost 5.55 cents, or 3.4%, at $1.5645 a pound.

Coffee futures have lost 6.6%, since reaching a high of $1.6980 Friday, on a combination of technical selling and as weather remains conducive for the ongoing Brazilian harvest. Worries over the U.S. economy have also hurt the market as weaker-than-expected economic data have rattled investors and led them to reduce exposure to commodities.

Technical selling was key to Tuesday's trade, an influence that was exacerbated when prices slipped below $1.60 a pound, said Hernando de la Roche, managing director of coffee trading at Hencorp Futures in Miami.

At this level, the market ran into pre-programmed sell orders, which ultimately pressed September coffee to $1.5825 a pound--its lowest level in two weeks.

In addition to the bearish chart influence, prices also lost traction on benign weather in top-grower Brazil.

"Conditions are dry, there is no frost and, since there is nothing really happening with the weather, it was another reason the market continued to go down today," said de la Roche.

Brazilian weather service Somar said the main coffee-growing regions will see dry, temperate weather this week, with no frost threat. The absence of rain will allow the harvest to progress.

The Brazil coffee harvest began in May and will run through September.

Traders continued to fret about the U.S. economy after a weaker-than-expected housing report.

Housing starts fell 5% in June to their lowest level since October 2009, the Commerce Department said Tuesday. The report showed housing continues to struggle amid weakness in the broad economy.

Building permits climbed 2.1% in June, versus pre-report expectations of a 0.7% rise, offering a ray of hope that activity is picking up.

The recent string of weaker-than-expected economic reports has caused traders to shun riskier commodity assets on ideas that demand for physical assets will be suppressed.

Total open interest on ICE fell 2,993 to total 171,912 lots.

Futures volume is pegged at 19,426 contracts, with 4,912 calls and 4,138 put options traded.

ICE Change (cents) Range
July $1.5645 dn 5.55 $1.5645-$1.6110
Sep $1.5855 dn 5.25 $1.5825-$1.6270

19/07: Falls On Chart Weakness, Outside Markets

DOW JONES NEWSWIRES

Arabica coffee futures for September delivery fell Monday on chart-based selling and weak outside markets.

Most active September coffee lost 3.25 cents, or 2%, to settle at $1.6380 a pound on ICE Futures U.S. in New York.

Much of the selling was chart related after September coffee had neared resistance at $1.70 a pound last week and eased. Monday's trade was a continuation of that weak technical trend.

"We were unable to get above $1.70, so people got a little cautious and began liquidating some positions," said Rodrigo Costa, vice president of institutional sales at Newedge in New York.

September coffee fell to a session and one-week low of $1.6125 before buying interest surfaced and traders bought back previously sold positions. This allowed prices to close off of their weakest levels of the day.

Outside influences were also a factor as weak commodity indexes and a choppy trade in equities provided selling pressure.

A weaker-than-expected report on U.S. housing Monday morning rattled investors. The National Association of Home Builders' gauge of confidence in new-home sales fell to 14 in July, the lowest since April 2009. Traders had expected the index to fall only slightly to 16, from a previously reported 17 in June.

The report encouraged some traders to sell commodities to reduce their exposure to riskier bets.

While the market saw increased hedging pressure last week from the ongoing Brazilian harvest, that influence was negligible Monday, a broker said.

Producers have harvested from 40%-50% of Brazil's arabica crop so far, said Costa.

Top-quality arabica supplies remain tight, however, as adverse weather led to short crops in Colombia and Central America. While those countries crops are expected to rebound this year, the harvest won't begin in earnest until the fall.

The tight supply situation continues to provide underlying support for coffee futures, said Costa.

Coffee exports from Mexico fell 33% in June from the year-ago level to 195,222 60-kilogram bags, the government said. the export cycle runs from October through September of the following year.

Total open interest on ICE rose 867 to total 174,905 lots. Just 39 positions remained open in nearby July ahead of its expiration on Tuesday.

Futures volume is pegged at 16,646 contracts, with 2,526 calls and 4,351 put options traded.

ICE Change (cents) Range
July $1.6200 dn 2.80 $1.6175-$1.6465
Sep $1.6380 dn 3.25 $1.6125-$1.6690

CFTC: Fundos comprados em 41.214 lotes

16/07: Near Steady On Chart, Commodity Selling

DOW JONES NEWSWIRES

Arabica coffee futures for September delivery closed near steady Friday after chart-based selling countered an early run to near three-week highs.

Most active September coffee lost 0.05 cent, or 0.03%, to settle at $1.6705 a pound on ICE Futures U.S. in New York.

While most of the activity in coffee was attributed to chart influences, pressure also stemmed from a weak commodity complex and more than 2% losses on Wall Street.

A report from the University of Michigan showing U.S. consumer sentiment tumbled to levels not seen since March 2009 cast a bearish pall over the markets. The report was the latest in a string of weaker-than-expected economic data that cast doubt on the recovery.

Traders sold commodities to limit riskier investments amid the shaky economic climate.

September coffee earlier in the session climbed to a high of $1.6980 on light speculative buying, where it tangled with chart resistance and slipped.

"We ran into selling pressure as prices neared $1.70, and even though we've been higher here, the upside momentum is dying out," said Boyd Cruel, senior softs market analyst at Vision Financial Markets in Chicago.

Coffee futures have been holding higher ground, in a range of about $1.60-$1.70, but recent rally attempts have been thwarted amid a lack of aggressive fund participation, a broker said.

Coffee continues to find underlying fundamental support from extremely tight supplies of top-quality arabica beans in Central America and Colombia, after adverse weather crimped output. This influence has allowed coffee futures to retain higher levels in recent sessions.

September coffee sees nearby chart resistance at $1.70, with support pegged at $1.55 a pound. A rally above $1.70 would encourage further gains while a break below $1.55 would have bears targeting $1.50, then $1.45 a pound.

Despite expectations for a bumper 2010-11 crop from top grower Brazil, beans are trickling in from the early harvest. Supplies are expected to remain tight in the near term and provide continued support for physical prices, traders said.

Much-needed supplies of the top-quality arabica beans from Colombia and Central America won't be available until the fall.

Total open interest on ICE rose 1,668 to total 174,038 lots. Just 139 positions remained open in nearby July ahead of its expiration on Tuesday.

Futures volume is pegged at 12,476 contracts, with 2,662 calls and 4,867 put options traded.

ICE Change (cents) Range
July $1.6480 unch $1.6465-$1.6500
Sep $1.6705 dn 0.05 $1.6505-$1.6980

15/07: Rises On Bullish Charts, Weak Dollar

Arabica coffee futures for September delivery rose Thursday, lifted bybullish charts and a weak U.S. dollar.
Most active September coffee added 2.2 cents, or 1.3%, to settle at $1.671 apound on ICE Futures U.S. Futures closed off their strongest levels of the day as traders took profits.
Coffee continues to find fundamental support from extremely tight supplies oftop-quality arabica beans in Central America and Colombia, though traderslargely attributed Thursday's gains to a strong chart picture.
Early buying took September coffee up to $1.67-$1.672, where it activated preprogrammed buy stops that took the market to its highs, said Hernando de laRoche, managing director of coffee trading at Hencorp Futures in Miami.
September coffee hit an intraday peak of $1.6945--a 2 1/2-week high--before traders began to take profits.
Background support emerged from a weak U.S. dollar and buying in the commodity indexes, which encouraged speculative interest in coffee.
Declines in equity markets due to economic concerns caused some nervousnessin commodities and encouraged late selling in coffee, a broker said.
Coffee futures have been trapped in a range from $1.55 up to $1.70 a pound.
The ability of September coffee to pierce through $1.70 would suggest further gains, while a breakdown below $1.55 would have bears targeting $1.50, then$1.45, said Rodrigo Costa, vice president of institutional sales at NewEdge inNew York.
Brazilian producers continue to see strong demand for their coffee, as internal prices rise, traders said.
Despite expectations for a bumper 2010-11 crop, beans are trickling in from Brazil's early harvest. Supplies are expected to remain tight in the near term and provide continued support for physical prices.
The International Coffee Organization said last week it expects Brazil's cyclically large crop to reach 50 million bags.
ICE coffee futures have rallied 24% since early June as supplies oftop-quality arabica beans became scarce due to adverse weather in Colombia and Central America.
Total open interest on ICE rose 498 to total 172,370 lots.

Futures volume is pegged at 19,446 contracts, with 4,532 calls and 8,715 put options traded.
ICE Change (cents) Range

July $1.6480 up 2.2 $1.6435-$1.6675

Sep $1.6710 up 2.2 $1.6430-$1.6945

14/07: Slips In Light Consolidation

NEW YORK (Dow Jones)--Coffee prices inched lower Wednesday as the market digested recent bullish action.

Nearby coffee for July delivery ended 0.65 cents, or 0.4%, at $1.6260 a pound on ICE Futures U.S. The most-actively traded September contract settled 0.75 cent, or 0.5%, lower at $1.6490 a pound.

Coffee prices have risen nearly 19% since June 10 as supplies of high-quality arabica beans are difficult to find. Those beans, from Colombia and Central America, are costly after poor weather reduced output there in the last two seasons. The next harvest begins in late fall.

At the same time, pace of the ongoing coffee harvest in the world's top producer, Brazil, is picking up. The International Coffee Organization said last week it expects Brazil's 2010-11 coffee crop to reach 50 million 60-kilogram bags.

Analysts said there is little pressure from bean sales at coffee origins. At the same time, speculators, like hedge funds and banks, are holding on to their bullish positions.

"I see nothing but technical consolidation in what is really a bull market," said Luis Rangel, vice president for commodities derivatives at ICAP Futures in Jersey City, N.J.

The September contract needs to move lower than $1.55 or above $1.70 to attract more trading activity, said Rodrigo Costa, vice president of institutional sales at Newdege USA in New York.

A potential bull flag pattern is developing on the daily and weekly chart, which could propel the coffee contract sharply higher over the next several weeks, a technical analyst says.

ICE coffee warehouse stocks decreased by 4,125 60-kilogram bags Wednesday to total 2.162 million bags, according to exchange data.

ICE coffee open interest --the number of active positions left at the end of the session-- increased by 1,816 lots Tuesday to total 171,872 lots, according to exchange data.

Volume was estimated at 10,697 lots, according to exchange data. In options, approximately 5,630 calls and 2,961 put options traded.

ICE Change Range Liffe Change
Jly $1.6260 -0.65c $1.6260-$1.6300 Jly $1,709 +$13
Sep $1.6490 -0.75c $1.6400-$1.6655 Sep $1,731 +$10

DJ Technical Special: ICE Coffee Consolidates In Bull Flag

ICE Sept coffee futures are modestly weaker Wednesday, as the market posts a consolidative "inside" day session in which the high and low are confined within Tuesday's range. While action over the past several weeks has been sideways, a potential bull flag pattern is developing on the daily and weekly chart, which could propel the coffee contract sharply higher over the next several weeks.

ICE Sept coffee recently traded down 15 points at $1.6550 a pound.

A bull flag or pennant pattern is a bullish formation within pattern analysis. It is formed by a long flag "pole," which can be seen on the daily chart from June 11-June 15. Now, the coffee market is in the midst of forming the flag or pennant part of the pattern, which foreshadows higher prices ahead.

"The market is marking out a range below the June 24 high and although short-term upside momentum has been waning, the shallow nature of the pullback suggests coffee will eventually resume the June [upside] breakout," said Terry Gabriel, technical strategist at Ideaglobal in New York.

"It appears that a bullish flag pattern is forming on the weekly chart," Gabriel said. "Over the next one to two weeks a thrust above $1.6720 would suggest a resumption of the prevailing advance," he added.

Once the bull flag breaks open to the upside, Gabriel said "we should see the market exceed the $1.7650 June high. We could see the market press the $1.7900/1.8200 area."

On the downside, Gabriel added: "we should see support at the $1.5900/1.5600 area. That should contain any weakness."

Overall, Gabriel advised traders to "build long positions looking for the resolution of the bullish flag pattern, with support at the $1.5900/1.5700 area."

13/07: Rises As Tight Supplies Attract Buying

NEW YORK (Dow Jones)--Roaster and speculator buying boosted coffee prices Tuesday as supplies are scarce in the near term.

Nearby coffee for July delivery ended up 2.10 cents, or 1.3%, at $1.6325 a pound on ICE Futures U.S. The most actively traded September contract also settled 2.10 cent, or 1.3%, higher at $1.6565 cents a pound.

Coffee prices have ranged from roughly $1.60 to $1.75 in the last three weeks since spiking 20% in mid June. Prices rallied in light of tight world supplies of high quality arabica beans. Those varieties are difficult to find ahead of the late fall harvest following two years of poor output attributed to bad weather.

Investor risk appetite boosted most commodities and equities prices Tuesday in light of bullish economic outlooks following strong initial corporate earnings. The dollar fell as traders sought riskier bets, which made futures less expensive in other currencies.

The pace of the ongoing coffee harvest in the world's top producer, Brazil, is picking up. The International Coffee Organization said last week it expects Brazil's 2010-11 coffee crop to reach 50 million 60-kilogram bags.

Roasters bought September futures after the contract scraped $1.59 Monday, said Hernando de la Roche, managing director of coffee trading at Hencorp Becstone Futures in Miami. That buoyancy showed speculative traders, like banks and hedge funds, that coffee could move higher. De la Roche said September futures could probe the $1.68 to $1.70 levels in the near term.

Coffee prices are in a sideways "congestion pattern," says Shawn Hackett, president of Hackett Financial Advisors in Boynton Beach, Fla.

"The longer this market trades sideways without a more sustainable correction, the more likely that another spike higher will be seen," Hackett said in the firm's Money Flow market letter.

However, incoming supplies could push prices into a bearish corrective mode, said Spencer Patton, chief financial officer at Steel Vine Investments in Chicago.

"Every day that ticks by is another day that the Brazilian harvest is easing supply tightness in the market," Patton said.

Total world coffee production for the 2010-11 season is projected between 133 million bags and 135 million bags, according to the ICO.

Volume was estimated at 15,432 lots, according to exchange data. In options, approximately 4,651 calls and 2,084 put options traded.

ICE coffee warehouse stocks decreased by 500 60-kilogram bags Tuesday to total 2.166 million bags, according to exchange data.

ICE coffee open interest--the number of active positions left at the end of the session--increased by 1,615 lots Monday to total 170,056 lots, according to exchange data.

ICE Change Range Liffe Change
Jly $1.6325 +2.10c $1.6325-$1.6450 Jly $1,659 +$16
Sep $1.6565 +2.10c $1.6210-$1.6700 Sep $1,721 +$16

ICE Coffee Seen Bullish In 2011 - Analyst

1151 EDT [Dow Jones] - The coffee market remains "extremely bullish," despite the incoming bumper crop from Brazil, says Shawn Hackett in the Hackett Money Flow Report. In 2011, Brazil's 2011 harvest will be at the weak end of the biennial crop cycle, adding to to another global supply deficit, Hackett says. "I would look buy coffee on any break to the $1.50 a pound area on the December futures contract. However, if the coffee market has a weekly close above the $1.65 area, then buy anyway as prices could straight spike to well over $2.00 a pound, Hackett says. (HEH)

Scarcity Vs. Starbucks: Going Cuckoo For Coffee

It's hard to find a commodity rallying harder in the short term these days than coffee. Spot coffee, as measured by the S&P Spot Coffee Index, is up nearly 20 percent year-to-date, and up almost 25 percent since its lows in April. In contrast, you could pick any major commodity index and find it's down for the year: The Goldman Sachs Commodity Index is down 12 percent; the DJ-UBS Commodity Index is down 9.8 percent and even the GreenHaven Continuous Commodity Index is down 4.8 percent.

Going back over the past two years, you'll find coffee's been one of the only solid performers in commodities:

The pale blue line labeled "KC1" shows front-month coffee futures up 13 percent since July 2008, while the red line, which represents the GSCI Index, is down a crippling 62 percent and change.

Of course, investing in coffee hasn't been without its costs. Like many commodities, coffee often trades in contango, i.e., tomorrow's contract is more expensive to own than today's. As a result, the long coffee investor has had to pay the contango-piper each month they've rolled their position forward. You can see that ding in the dark blue line on our chart: the iPath Dow Jones-UBS Coffee ETN (NYSEArca: JO). As you can see, while JO is still up a healthy 15 percent and has certainly performed better than the broader commodities markets, JO has still lost money over spot coffee prices.

Scarcity Vs. StarbucksWhat's behind the pop in coffee prices is relatively easy to explain, and it all comes back to supply and demand.

According to the USDA, the demand picture for coffee remains strong:

Global Coffee Demand


With the exception of a minor hiccup during the 2008 financial crisis, when we all switched from coffee to hard liquor to calm our nerves, global coffee drinkers have become insatiable. The actual amount of coffee consumed in less than 10 years has more than doubled.


Farmers, on the other hand, can only do so much to keep up:

Global Coffee Production


So as you might expect, the end result is that there's far less of the magic bean available to turn into actual drinkable coffee. Indeed, where the world used to have years' worth of coffee supplies sitting in stockpile, now those inventories have dwindled to mere months.


Global Coffee Stocks: Days-to-Use



This increasingly tight inventory situation has led to increased price sensitivity to production shocks. If a year's worth of coffee were on hand in the warehouses, the market could easily absorb a minor disruption from any major coffee producer. But with stocks so low, the slightest provocation can send futures traders into a buying frenzy.


Coffee's Future

So how extreme will the situation get?Well, demand is clearly higher than supply at the moment, and even a momentary surprise in the record size of Brazil's crop this year won't be enough to dampen the long-term dynamics. At the same time, the "scarcity" threat has long since been priced into the market. So all told, we've seen a substantial shift in how the commodities markets are thinking about coffee.

Consider the persistent (and near-eternal) contango in the coffee market:


Futures Curves

From left to right, this shows the futures curves in 2007, 2009, six months ago and today (as shown by the top black line). While you can clearly see the massive demand increase over the past few years reflected in the ever-rising mean of each curve, the overall structure remained intact: contango, contango, contango. That is, until now. For the first time in recent memory, the front-month roll is the only roll that will cost you, and investing further out on the curve actually implies that you think today's prices are abnormally high; that is, you're better off buying next year's coffee today, rather than storing it up for a rainy day.

More than any supply and demand figures, this structural shift in the curve makes me think that this time, something is different in the coffee markets. That's good news for some investors; i.e., those working and rolling positions further out on the curve. For the moment, however, JO investors are still stuck paying that front-month contango tax.

But next month? Maybe this time it really is different.

Written by Julian Murdoch
July 12, 2010 11:56 am EDT

12/07: Edges Lower In Thin Trade

Arabica coffee futures for September delivery closed with minor losses on Monday, pressured by a weak trade in the commodity indexes and a firm U.S. dollar.

Most active September coffee traded on ICE Futures U.S. lost 0.30 cent, or 0.18%, to settle at $1.6355 a pound. Thinly traded July lost 0.05 cent, or 0.03%, to end at $1.6115.

Coffee futures were held to recent ranges--pressured by key outside markets--as prices continue to consolidate after the late June rally to 12-year highs.

"In the short term, we had that big, strong rally and we're just kind of settling out...and then we may see another leg up," said Jimmy Tintle, a broker/analyst with TransWorld Futures in Tampa, Fla.

Continued tight nearby supplies of high-quality arabica beans could have bullish traders targeting $1.8490 on September coffee, he said.

However, the harvest pace out of top-grower Brazil is picking up momentum as large quantities of cherries ripen on the bushels, local agricultural consultancy Safras & Mercado said Monday.

The arabica harvest reached 45% complete as of July 7, up from 40% the previous week and 40% in the comparable year-ago period. Coffee farmers are rushing the beans to market to take advantage of high prices.

Tight supplies out of Colombia, the world's largest grower of top-quality arabica beans, continues to provide support for coffee futures.

Safras estimates the cyclically large Brazilian crop at 54.6 million bags, of which 41.5 million are arabica.

The International Coffee Organization said last week it expects Brazil's2010-11 coffee crop to reach 50 million bags.

Large fund traders continued to increase their net-long exposure to the market, meaning they expect prices to rise.

Funds increased their net-long position in coffee to 34,511 contracts in the week through July 6, from 32,979 the previous week, the disaggregated Commitments of Traders report showed.

Funds are 14.9% net long, versus 14% the week prior.

Total open interest on ICE rose 700 to total 168,441 lots.

Futures volume is pegged at 11,845 contracts, with 4,485 calls and 4,065 put options traded.

ICE Change (cents) Range
Jul $1.6115 dn 0.05 $1.5965-$1.6115
Sep $1.6355 dn 0.30 $1.5900-$1.6440

09/07: DJ ICE Coffee Review: Modest Gains; Traders Take Profits

DOW JONES NEWSWIRES

Arabica coffee futures for September delivery closed with modest gains--off session peaks--as traders took profits ahead of the weekend.

Most active September coffee on ICE Futures U.S. added 1.75 cent, or 1.1%, to settle at $1.6385 a pound, off the session high of $1.6720.

Thinly traded July, which expires on July 20, rose 1.55 cents, or 0.97%, to end at $1.6120 a pound.

Coffee futures have traded in a range from $1.57 up to $1.70 in recent sessions, as the market consolidates after touching a 12-year high of $1.7650 on June 24. Extremely tight supplies of top-quality arabica beans combined with unfounded cold weather concerns in Brazil and heavy fund buying helped futures to their highs. The market continues to hold at strong levels despite fair weather in top grower Brazil and expectations for the country to produce a large crop of 50 million bags.

Firm equity markets helped the commodity sector get off to a strong start Friday morning, as rebounding stock markets indicate a pickup in economic activity, a trader said.

The Dow Jones Industrial Average has gained about 5.8% this week after diving last Friday to its lowest point since October 2009.

"We're wrapping up a strong week in the equity markets, though coffee has been trading rather independently," said Spencer Patton, analyst and chief investment officer at Steel Vine Investments in Chicago.

Coffee futures also found support on declining world exports.

Cumulative exports from October 2009 to May 2010 fell 8.1% to 61 million 60-kilogram bags, from 66.3 million the previous year, the International Coffee Organization said Thursday.

World coffee production in 2010-11 is estimated between 133 million and 135 million tons, the ICO said, maintaining its June projection.

Output from Colombia--the world's largest grower of mild, washed arabica beans--for 2010-11 is expected to hit 10 million to 11 million bags, up 2.2 million to 2.7 million bags from 2009, according to the ICO.

Supplies may remain tight for some time yet, however, as consumption increases.

Global consumption is expected to have grown by 2 million bags to 132 million in 2009, the ICO said, as a slowdown in some traditional consuming countries was tempered by growth in developing nations.

Patton said coffee may be forming a potentially bearish head-and-shoulders pattern, which could indicate a top in the market.

A close below $1.5685 in September coffee would verify the pattern, while a close above $1.71 would invalidate it, he said.

Options on August coffee expired Friday, which also pressured the market as traders gravitated toward the $1.60 strike price, the trader said.

Coffee futures also find support from a continued, significant drawdown in warehouse supplies. ICE warehouse stocks on Friday fell 6,287 bags to total 2.173 million bags, down about 31% from December 2009 levels, the exchange reported.

Total open interest on ICE fell 159 to total 167,741 lots. Just 83 contracts remained open in nearby July.

Futures volume is pegged at 16,575 contracts, with 6,333 calls and 2,889 put options traded.

ICE Change (cents) Range
July $1.6120 up 1.55 $1.6120-$1.6205
Sep $1.6385 up 1.75 $1.6205-$1.6720

Coffee Prices May Decline 10% to $1.45 by September on Brazil Record Crop

Arabica coffee prices may fall 10 percent by September when Brazil, the world’s biggest producer of the beans, finishes harvesting a record crop and adds its beans to the market, said consulting firm Safras & Mercado.

Coffee futures may drop to $1.45 a pound on ICE Futures U.S. in New York by September from today’s $1.615 a pound at 11:56 a.m. local time, Gil Barabach, a coffee analyst with the Porto Alegre, Brazil-based firm, said in a telephone interview. Futures may rebound to $1.60 by year-end on a tight world supply, he said.

Prices of the milder variety, preferred for specialty beverages such as those made by coffee chain Starbucks Corp., climbed to a 12-year high last month.

Brazil may harvest 54.6 million coffee bags this year, up from last year’s 43.9 million bags, Barabach said. About 52 percent of the country’s coffee crop was harvested through July 2, he said.

A bag of coffee weighs 60 kilograms (132 pounds).

Global Coffee Output May Reach 135 Million Bags in Year, Group Forecasts

World coffee production is forecast at between 133 million to 135 million bags in the 2010-11 crop year, the London-based International Coffee Organization said in an e-mailed report. Production in Brazil is estimated at about 50 million bags, the group said. Output in Vietnam is expected to be between 16 million to 18 million bags, the ICO said. A bag of coffee weighs 60 kilograms (132 pounds). Brazil is the world’s biggest producer while Vietnam is the largest grower of robusta beans.

08/07: Coffee Futures Fall as Brazil's Crop May Escape Frost Damage

Arabica-coffee futures fell for the third time in four sessions after a weather forecaster said Brazil’s crop, the world’s largest, should be undamaged by frost this month. Cocoa also declined.

The prospect of freezing weather in the South American country sent coffee prices to a 12-year high in New York last month. The risk was lowered yesterday when Sao Paulo-based forecaster Somar Meteorologia predicted that Brazil’s main producing area probably will be frost-free through July.

“There were a lot of jitters off of the fact that some cold weather moved into the area earlier than usual,” said Tom Mikulski, a senior market strategist at Lind-Waldock, a broker in Chicago. “With no weather premium and the harvest moving along as scheduled, it’s hard not to be a little bearish right now.”

Arabica coffee for September delivery fell 0.95 cent, or 0.6 percent, to $1.621 a pound on ICE Futures U.S. in New York. Prices have jumped 19 percent this year.

Global coffee output will probably be 133 million to 135 million bags in the year that begins Oct. 1, the International Coffee Organization said today in an e-mailed report from London. That’s up at least 10 percent from the 120.6 million bags estimated for the current year.

Bigger Crops?

“There are indications that production levels are gradually increasing,” Nestor Osorio, ICO’s executive director, said in the report. “A return to normal production levels in a number of producing countries could contribute to the application of corrections as supplies of new crop arrive on the market.”

Brazil’s production may total about 50 million bags, the trade group said. A bag of coffee weighs 60 kilograms (132 pounds).

“Once the harvest is done, you’re going to see a large influx of coffee into the market,” Mikulski said. “If production numbers hold up, I don’t see any reason how this market could hang onto these levels.”

Cocoa futures for September delivery fell $12, or 0.4 percent, to $2,969 a metric ton in New York. Prices have gained 17 percent in the past year.

07/07: September Rallies 3.4%, Recoups Losses

Arabica coffee futures for September delivery rallied Wednesday, as bullish chart influences and the strength of key outside markets helped coffee to recoup Tuesday's sharp losses.

Most-active September coffee rose 5.40 cents, or 3.4%, to settle at $1.6305 a pound.

A combination of speculative buying and traders buying back previously sold positions lifted coffee, with an additional boost provided by outside market strength, traders said.

A gain of 2.9% in crude oil, a steady to weaker U.S. dollar and the Dow Jones Industrial Average up 2.4% encouraged traders to buy riskier commodity investments. The major commodity indexes posted gains of 1.5% to 2.3% on the day.

"Short term, coffee was oversold the last couple days on light volume," said Alonso Tomas, a coffee trader at Hencorp Futures in Miami.

In addition, bullish charts were an influence as traders closed an upside gap on the September chart that was left from Tuesday's lower opening. The desire to fill that gap during the session provided chart-watching bulls with ammunition, Tomas said.

Coffee futures were in "recovery mode" Wednesday on sentiment that Tuesday's losses were overdone, said Jack Scoville, an analyst and vice president at Price Futures Group in Chicago.

Fundamentally, supplies of quality arabica beans remain extremely tight and hedging pressure is muted.

"There's no deliverable grade coffee around. Brazil is not a deliverable origin" against ICE futures, "even if they did meet quality standards," said
Scoville.

Brazil is the world's largest coffee grower, but its crop isn't deliverable against ICE futures, which are high-quality washed arabica beans. Poor harvests in Mexico, Colombia and Central America have left the highest-quality beans in very short supply.

Coffee output in Colombia, however, is expected to climb this year on improved growing weather.

Colombian coffee production will likely reach between 10 million and 10.5 million bags, up from 7.8 million in 2009, Colombia's National Federation of Coffee Growers, or Fedecafe, said Wednesday.

Technically, action so far this week has left a double-bottom support area in September coffee at $1.5685-$1.5705. While coffee futures could trade lower, Scoville sees downside potential limited given the tight supply situation.

"Everyone wants to get all bear-ed up, but there's no fundamental reason in ICE coffee to do that," he said.

ICE warehouse stocks fell 10,792 bags to total 2.182 million 60-kilogram bags, the exchange reported.

Total open interest on ICE fell 4,025 to total 165,787 lots. Just 188 contracts remained open in nearby July ahead of its July 20 expiration.

Futures volume is pegged at 18,602 contracts, with 6,726 calls and 3,662 put options traded.

ICE Change (cents) Range
July $1.6065 up 5.15 $1.5550-$1.6065
Sep $1.6305 up 5.40 $1.5705-$1.6395


(END) Dow Jones Newswires

07/07: Hencorp Commcor

Mercado de Café pela manhã: Nesta manha o mercado de café arábica em Nova Iorque trabalha cotado a 158,40 com 75 pontos de alta e range entre 157,65 e 159,75, base set/10.

Contrariando a acentuada tendência assistida na sessão de ontem, a cotação do café nesta manhã de quarta-feira vem trabalhando em ligeiro movimento de alta, porém ainda respeitando seu range de trabalhado.

Vale lembrar que nesta próxima sexta-feira se dá o vencimento das opções de agosto, o que deverá deixar o mercado, como de costume, um tanto mais volátil.

O mercado de café trabalha com suporte de 157,50 / 156,85 e resistência de 160,30/ 163,50. Na sessão de hoje desceu 1 canudo, totalizando no acumulado do período 551 canudos.

De acordo com a Cecafé, os embarques entre os dias 01 e 06 de julho somaram 120.848 sacas, uma variação negativa de 0,1% em relação ao mesmo período do mês anterior.

Coffee Slumps to Two-Week Low on Greater Output in Brazil; Cocoa Declines

Coffee prices in New York fell the most since November on speculation that global supplies will increase as production jumps in Brazil, the world’s largest grower. Cocoa also dropped.

Brazil’s coffee output may total 47 million bags this year, up 19 percent from a year earlier, as trees enter the higher- yielding phase of a two-year cycle, according to the Agriculture Ministry. No frost is forecast for coffee-growing areas through July 9, the government’s weather agency said on its website.

“Fundamentals are bearish,” said Boyd Cruel, a senior analyst at Vision Financial Markets in Chicago. “The Brazilian crop is expected to be big, and there’s no news, like threat of freezing temperatures, to push prices up. Coffee has lost its upside momentum.”

Arabica coffee for September delivery fell 6.65 cents, or 4 percent, to $1.5765 a pound on ICE Futures U.S. in New York, the biggest loss for a most-active contract since Nov. 10. Earlier, the price reached $1.5685, the lowest level since June 18. Futures are down 11 percent since reaching a 12-year high on June 24.

On London’s Liffe exchange, robusta-coffee futures for September delivery dropped $60, or 3.5 percent, to $1,650 a metric ton, after touching $1,643, the lowest price since June 24.

Arabica coffee, a variety grown in Brazil and brewed by companies such as Starbucks Corp., may fall as low as $1.50 a pound by the end of the week, Cruel said.

Further Drop Predicted

Robusta beans, used mostly in instant coffee, are harvested mostly in Asia and parts of Africa. Each bag weighs 132 pounds, or 60 kilograms.

Arabica prices surged as much as 31 percent since the end of May to $1.765 on June 24. Robusta jumped as much as 34 percent in the same period.

“On the way up, there was a lot of panic buying and short- covering,” Angus Kerr, owner of trading company Coffee ag in Cobham, England, said by telephone, referring to purchases that closed bets on falling prices. “The market has further to come down before it consolidates.”

Cocoa for September delivery slipped $4, or 0.1 percent, to $2,967 a ton in New York. On London’s Liffe, cocoa futures for September delivery dropped 6 pounds, or 0.3 percent, to 2,394 pounds ($3,627) a ton.

To contact the reporters on this story: Yi Tian in New York at ytian8@bloomberg.net; M. Shankar in London at mshankar@bloomberg.net

06/07: Corrects 4% Lower As Funds Take Profits

NEW YORK (Dow Jones)--Coffee prices dropped 4% Tuesday as speculative fund traders took profits against a backdrop of bearish economic sentiment.

Nearby coffee for July delivery ended 6.80 cents, or 4%, lower at $1.5550 a pound on ICE Futures U.S., the lowest levels in 19 days. Most actively traded September coffee settled 6.65 cents, or 3%, lower at $1.5765.

Coffee prices corrected Tuesday after rallying nearly 25% in mid June. Short supplies of high-quality beans prompted gains which attracted the interest speculative traders, whose primary business is not in physical coffee. However, a lack of follow-through strength has led some investors to second-guess their positions in coffee by selling to avoid further losses.

Coffee got a running start in Tuesday's bearish session. While ICE trading was closed in observance of the July 4 holiday, NYSE Liffe robusta coffee futures fell 2%. Pre-set orders to sell, or stops, were triggered when ICE September coffee breeched $1.60.

"The coffee balloon may be ready to deflate," said Sterling Smith, a market analyst at Country Hedging in St. Paul, Minn.

The U.S. Department of Agriculture recently projected a record world coffee crop in the coming season. Production is pegged 6% higher than demand at 139.5 million 60-kilogram bags. The total crop from Brazil, the world's top producer, is seen at 55.3 million bags. Brazil is currently harvesting the crop. No sizeable fresh supplies of high-quality beans will be available until the late-fall harvest from Central America and Colombia. Supplies from those countries are short following two seasons of poor harvests amid unfavorable weather.

Brazilian coffee sellers may pressure the futures market if prices hold near current levels, said Rodrigo Costa, vice president of institutional sales at Newedge USA in New York.

Selling has been relatively light from Brazil at this point in their season. Much of Brazil's incoming bumper crop does not meet the quality standards of coffee traded on ICE.

Generally pessimistic market sentiment also dragged U.S. equities, the ollar and many commodities lower during the session. The most recent installment of disappointing economic data showed slower-than-expected U.S. service-sector growth in June.

Analysts said September coffee futures have support on technical charts near $1.5740 and $1.5750.

"As long as it's above [that level], we might consider [these losses] a correction from the higher move that we saw in June," Costa said.

ICE coffee warehouse stocks decreased by 7,487 60-kilogram bags Tuesday to total 2.193 million bags, according to exchange data.

ICE coffee open interest--the number of active positions left at the end of the session--increased by 2,649 lots Friday to total 169,812 lots, according to exchange data.

Volume was estimated at 21,217 lots, according to exchange data. In options, approximately 5,789 calls and 4,111 put options traded.

ICE Change Range Liffe Change
Jly $1.5550 -6.80c $1.5500-$1.6100 Jly $1,625 -$63
Sep $1.5765 -6.65c $1.5685-$1.6350 Sep $1,650 -$60


-By Holly Henschen, Dow Jones Newswires; 212-416-2138 begin_of_the_skype_highlighting 212-416-2138 end_of_the_skype_highlighting;
holly.henschen@dowjones.com


(END) Dow Jones Newswires

07-06-10 1502ET

Copyright (c) 2010 Dow Jones & Company, Inc.

Coffee Declines on Speculation Prices Climbed Too High to Reflect Demand

By M. Shankar - Jul 6, 2010

Coffee fell in New York and London on speculation prices climbed too high in recent weeks to reflect the outlook for supply and demand.

Arabica futures for September delivery slid as much as 3.5 percent to the lowest price in two weeks on ICE Futures U.S. in New York. The beans jumped more than a quarter in the four weeks through June 25, as did the harsher robusta variety traded on the Liffe exchange in London.

“On the way up, there was a lot of panic buying and short- covering,” Angus Kerr, owner of trading company Coffee ag in Cobham, England, said by phone, referring to buying of beans to close bets on lower prices. “The market has further to come down before it consolidates,” he said.

September-delivery arabica declined 3.8 cents, or 2.3 percent, to $1.605 a pound on ICE Futures U.S. at 8:42 a.m. local time. Robusta for September delivery dropped 2.9 percent to $1,661 a metric ton on Liffe, rebounding from a slide of as much as 3.9 percent, the biggest retreat since Nov. 10.

Traders yesterday exchanged 500 lots of September $1,700 robusta call options on Liffe, according to data from the bourse. They also exchanged 725 lots of September $1,700 put options and 225 lots of $1,750 puts. Calls give the right to buy a commodity at a preset price, while puts confer the right to sell.

Raw sugar for October delivery rose 0.18 cent, or 1.1 percent, to 16.88 cents a pound in New York. White, or refined, sweetener for October delivery was little changed at $502.50 a ton on Liffe.

Cocoa for September delivery slipped $1 to $2,970 a ton in New York. The chocolate ingredient for September delivery dropped 0.1 percent to 2,397 pounds ($3,635) a ton on Liffe.

To contact the reporter on this story: M. Shankar in London at mshankar@bloomberg.net

DJ MARKET TALK: ICE Coffee Slides To 11-Session Low; Funds Sell

1311 EDT [Dow Jones] - ICE arabica coffee futures are trading off of their lowest levels in nearly three weeks as speculative funds take profits.
Most-active Sep coffee is down 6.45 cents at $1.5785 a pound, off of the $1.57 intraday low. Funds are selling long positions after the market was unable to
push beyond 12-year highs hit June 24. The market is correcting as was expected, with technical support at $1.5540 and $1.5750, analysts say.
Fundamental factors are unchanged, though recent losses have sparked technical sales, one analyst notes. Liffe Sep robusta coffee settled $60 lower at $1,650
a ton. (HEH)

BULLMAN MACRO FUND PLANS TO TAKE SHORT POSITION ON ARABICA MARKET AT AROUND 172 CENTS/LB

By Sarah McFarlane

LONDON, July 2 (Reuters) - ICE arabica coffee, near 12-year highs after a blistering rally, is looking overbought and a correction could see prices shed 5 percent to trade around 158 cents a lb, hedge fund Bullman Investment Management says.

Nick Bullman, managing partner of the fund, said that although it does not currently hold a position in the arabica market, the fund plans to take a short position if the benchmark September contract rises to around 172 cents.

Prices stood at 164.90 cents by 1213 GMT.

Bullman Investment Management, a macro hedge fund with less than $100 million under management, had around 30 percent of its funds allocated to agricultural commodities in June.

"If you look at the assets which have done well year to date it's commodities like gold, treasury as a flight to safety, and some agricultural commodities," said Bullman.

"There's always demand for sugar and coffee. When you look at soft commodities they're very risk protective assets because there's always going to be a demand."

Bullman said macro funds have rotated money around the commodity and currency markets in 2010 as few assets are "working" for funds this year.

CAFFEINE HIGH

New York-traded ICE arabica coffee prices hit a 12-year high at 176.50 cents in June after a short-covering rally in London robusta coffee triggered fund buying in both the London and New York coffee markets.

Coffee and sugar have seen some of the biggest moves in the commodities complex so far in 2010, with arabica coffee rising around 20 percent year-to-date and sugar prices nearly halving from their February peak of over 30 cents a lb.

Heavy losses in sugar futures were triggered by an improved supply outlook, with 2010/11 forecast to see the first global sugar surplus following several years of demand outstripping production.

Coffee fundamentals remain unchanged, with a record crop expected from Brazil.

"Nothing has changed which would drive prices upwards. The only risk in adding short positions is the momentum has been strong on the upside," said Bullman.

"If you look at the change in non-commercial open interest it's clear hedge funds have been investing," he added.

Money managers, which include hedge funds, increased their net long positions in arabica coffee futures contracts traded on ICE Futures U.S. by 57 percent in the week ending June 22.
[ID:nN25574346]

"Macro funds are rotating through various asset classes as they become over valued or undervalued and coffee had become undervalued," said Bullman.

"Is there a possibility funds are going to rotate back out of it? Yes, absolutely." (Reporting by Sarah McFarlane; Editing by Veronica Brown and Sue Thomas)

((sarah.mcfarlane@thomsonreuters.com ; +44 207 542 5937; Reuters Messaging: sarah.mcfarlane.reuters.com@reuters.net ))
Keywords: COFFEE/BULLMAN

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Friday, 02 July 2010 15:13:40RTRS [nLDE6610MA] {EN}ENDS

02/07: Down On Pre-Weekend Profit Taking

DOW JONES NEWSWIRES

Arabica coffee futures fell Friday while traders took profits off of Thursday's highs and as investors received additional gloomy economic news ahead of the three-day U.S. holiday weekend.

Most active September coffee on ICE Futures U.S. in New York fell 3.95 cents, or 2.4%, to settle at $1.6430 a pound.

Thinly traded July coffee lost 3.90 cents, or 2.4%, to end at $1.6230 a pound.

Markets will be closed Monday for the Independence Day holiday and will reopen Tuesday morning.

Speculative fund selling was encouraged by poor economic news that weighed on equities and continued to fuel ideas that a recovery will be longer and harder than previously thought.

September coffee lost 2.7% this week as traders took profits after prices shot to 12-year highs and as a string of poor economic news shook investors who may have hoped the recovery would be more advanced at this stage.

U.S. nonfarm payrolls in June fell by a higher-than-expected 125,000, while adding only 83,000 private-sector jobs. U.S. factory orders fell 1.4% in May amid expectations for just a 0.8% decrease.

Considering the extremely overbought levels coffee futures had struck, the market is holding up well, despite Friday's mild setback.

"Coffee appears to be setting up a new pricing structure, with $1.57 to $1.60 being cheap coffee and $1.75 being expensive," said Sterling Smith, analyst with Country Hedging in St. Paul.

"We had a very, very spiky and intense rally in coffee that often gives way to very sudden price implosions, and thus far we've been able to avoid those," he explained.

If coffee futures can continue holding in recent ranges, it may portend additional bullishness in the near term, Smith said.

Nearby supplies of top-quality arabica coffee remain tight and continue to offer underlying price support. The harvest out of top grower Brazil continues to advance, though traders have said there are quality concerns with some of the crop. Beans being harvested in Brazil have reportedly been inferior to Central American and Colombian beans.

Still, with weather aiding the Brazilian harvest, increased producer, or origin, sales have crimped New York futures at their highs.

"There are always quality concerns with beans out of Brazil, and Brazilians themselves are becoming very large coffee consumers," said Smith.

Weather conditions are expected to continue favorable for the Brazilian coffee harvest, with no significant cold weather in sight, said Bryce Anderson, meteorologist with Telvent DTN.

Technically speaking, September coffee needs to hold above the weekly low of $1.6010 to avoid further losses. Nearby resistance is located at Thursday's high of $1.6925, then at $1.7065 and $1.7085 a pound.

London robusta coffee futures closed with minor losses, pressured by the declines in New York, after reaching new highs earlier in the session on tight origin supplies.

On Friday, ICE warehouse stocks fell 3,518 bags to total 2.2 million 60-kilogram bags, the exchange reported.

Total open interest on ICE rose 1,505 to total 167,163 lots. Just 214 contracts remained open in nearby July ahead of its July 15 expiration.

Futures volume is pegged at 18,468 contracts traded, with 3,586 calls and 5,758 put options traded.

ICE Change (cents) Range
July $1.6230 dn 3.90 $1.6230-$1.6590
Sep $1.6430 dn 3.95 $1.6375-$1.6820