quinta-feira, 22 de julho de 2010

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

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