quinta-feira, 1 de julho de 2010

01/07: Higher On Weak Dollar, Tight Stocks


Arabica coffee for September delivery rose Thursday, supported by a falling U.S. dollar and further underpinned by declining warehouse stocks and tight physical supplies of arabica beans.

Most-active September coffee added 2.40 cents, or 1.5%, to settle at $1.6825 pound on ICE Futures U.S. Thinly traded nearby July rose 2 cents, or 1.2%, to $1.6620 a pound.

September coffee has risen 5.1% since making a weekly low Tuesday of $1.6010 a pound. Some traders believe recent losses were overdone, sparking a technical price rebound. Bulls point to ongoing tight physical supplies of top-quality arabica beans, falling warehouse stocks and a weak U.S. dollar. Bears argue that Brazilian new-crop coffee is flowing into the market and is beginning to loosen the supply situation.

Top grower Brazil is expected to boost arabica production by 27% in 2010-11. Recent rallies have been crimped in part by origin, or producer selling, a sign that the large Brazilian harvest is influencing the market. Central American and Colombian beans are beginning to trickle in but won't be available on a widespread basis until the fall.

Still, "there's still no old-crop coffee, and the new crop in parts of Central America at least seems to be moving out pretty fast," said Jack Scoville, analyst and vice president at Price Futures Group in Chicago.

Traders are concerned about the quality of the arabica beans coming out of Brazil, as most of the crop being picked is inferior to that of Central America and Colombia.

Coffee futures also found support from a crumbling dollar linked to dour economic news.

A 30% plunge in pending U.S. home sales in May and a surprising increase of 13,000 in U.S. weekly jobless claims pressured both equities and the dollar. A worse-than-expected decline in the Institute for Supply Management's June manufacturing index to 56.2, from 59.7 in May, added to the economic worries.

Traders had previously bought the greenback as a safe-haven play during times of economic weakness, but Thursday's decline may have marked a shift in psychology. Traders are now concerned that the economy may slip into double-dip recession or that the malaise could lead to deflation, pressuring the dollar.

ICE warehouse stocks fell 9,122 bags to total 2.204 million bags, according to the exchange.

Open interest--the number of contracts outstanding between traders at the prior day's close--rose 248 contracts to total 165,658 contracts, ICE reported.

Futures volume is estimated at 23,063 contracts, with 10,794 calls and 5,585 put options traded.

ICE Change Range
July $1.6620 up 2.00c $1.6370-$1.6620
Sep $1.6825 up 2.40c $1.6420-$1.6925

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