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
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
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