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
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
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