04/10: Coffee Futures Drop As Supply Concerns Ease

NEW YORK (Dow Jones)--Coffee futures plunged to their lowest levels in nearly six weeks as traders took profits ahead of harvests throughout Central America and Colombia.

Analysts said losses early in the day triggered a string of automatic sell orders that sent prices to their lowest level since Aug. 27.

"The funds that were long have some stops in there to protect profits," said analyst Bill Raffety at commodities futures brokerage Penson GHCO, referring to speculative investors, such as hedge funds, that had standing orders to close out positions once prices fell below certain levels.

Coffee for December delivery settled 8.6 cents, or 4.8%, lower at $1.7250 a pound on ICE Futures U.S.

Coffee futures have soared since June on fears that drought in Brazil, the world's biggest coffee grower, would damage its crop of highly sought arabica beans and leave world supplies unable to keep up with demand. But those concerns now appear overblown.

"Prices are very unjustified," said Tom Mikulski of Lind-Waldock in Chicago.

Now that Brazil is getting wetter weather and a global surplus is more likely, traders are quickly pulling back. Monday's session marked the fourth consecutive day coffee futures settled lower.

"October kicks off harvest season for Central America and Colombia," said James Cordier of Liberty Trading Group. "Supplies are not going to be huge, but they will be available this month."

He said prices could dip as far as $1.65 pound in the coming days should funds continue closing out long positions, essentially cashing in on bets that prices would rise.

29/07: Brazil's Bumper Coffee Harvest Nears End

Brazil's bumper coffee harvest has gone smoothly this year and is almost entirely completed, says Gil Carlos Barabach, a coffee analyst at local agricultural consultancy Safras & Mercado. This season, the arabica harvest which began in around May, was spurred by attractive coffee prices, he
says. Barabach pegs the 2010-11 arabica and conillon crop at 54.6 million 60-kilogram bags. Carlos Santana, a trader at Santos-based exporter Interagricola, agrees that Brazil's harvest has gone well and was helped by favorable dry weather. The quality of the beans has been exceptional, he says.
Moreover, concerns about the development of the next 2011-12 coffee crop in Brazil have been eased by recent rains, he adds. Brazil is the world's No.1 coffee producer.

27/09: Rain Bodes Well For Brazil's 2011 Coffee Crop

DJ MARKET TALK: Rain Bodes Well For Brazil's 2011 Coffee Crop[Dow Jones]--Rain in Brazil's main coffee growing regions is "fantastic" news for local producers, says John Wolthers, a trader at coffee exporter Comexim. Although the rain fell later than expected, it is now coming at an optimal time to trigger good flowering on coffee bushes that determines the size of next year's crop, he says. Although the next crop will be seasonally smaller, Wolthers says that the output is likely to be a good volume despite the long period of dry weather that threatened to hurt the development of the 2011 crop. "This is fantastic news for producers," Wolthers says. Moreover, Wolthers says that Brazil's coffee producers have cash in their pockets after brisk sales throughout 2010 and they don't currently face pressure to sell, he says. Brazil is the world's No.1 coffee producer. Contact us at +55-11-3544-7074; Anthony.Danby@dowjones.com

23/09: ICE Coffee Higher, Few Brazilian Sales

1631 [Dow Jones] Coffee futures on ICE ended higher, but the rise failed to trigger significant trade in Brazil, the world's No. 1 coffee producer. Average prices for a 60-kilogram bag of arabica coffees in the local spot market Thursday are some 15 Brazilian real, or $9, lower than last week after bean
prices dove early this week, says Gil Carlos Barabach, a coffee analyst at local agricultural consultancy Safras & Mercado. Moreover, Brazil's producers are waiting to see whether rain forecasts in the coming days will be enough to alleviate potential damage to next season's coffee crop, he says. "Having sold a lot of beans already, they can afford to sit back and wait," he says. Arabic coffee for December delivery settled 0.9% higher at $1.8165 a pound.

24/08: ICE Coffee Tumbles 8.1% As Funds Sell

1354 EDT [Dow Jones] - Coffee on ICE Futures US tumbled in a technical
correction after the market had become overbought near 13-year highs and as
fund traders sold commodities due to renewed economic fears. Coffee futures had
reached levels considered too high, particularly with a potentially record crop
in Brazil and larger crops in Colombia and Central America around the corner, a
trader says. London robusta coffee also fell, with nearby September down 7.9%.
ICE September coffee fell 14.65 cents, or 8.1%, to $1.6685 a pound. Most active
Dec lost 14.80 cents, or 8.1%, to settle at $1.6845.

23/08: ICE Coffee Weakens; Overbought Market

Aug 23, 2010 (Dow Jones Commodities News via Comtex) -- 1435 EDT [Dow Jones] -- Coffee on ICE Futures US fell Monday as prices became top heavy at current levels near 13-year highs, encouraging light selling interest. A mixed trade in the commodity indexes also led to selling in coffee. After hitting a session peak of $1.8675, surpassing Friday's high, Sep became overbought, says Sterling Smith, analyst at Country Hedging in St. Paul, Minn. A total of 217 deliveries were made against Sep on its first-notice day, about in the middle of expectations, and were considered neutral for prices, says Alonso Tomas, trader with Hencorp Futures in Miami. Futures volume is pegged at 11,973 contracts, with 5,485 calls and 4,279 put options traded. Nearby September coffee lost 0.05 cent, or 0.03%, to $1.8150 a pound. Dec fell 1.80 cent, or 0.97%, to $1.8325.

20/08: DJ ICE Coffee Nears 13-Year High As Supplies Remain Scarce

Coffee futures shot to their highest level in nearly 13 years as nearby supplies of top-quality Arabica beans remain tight and producers scramble to acquire the beans.

Friday, coffee traded on ICE Futures U.S. for nearby September delivery hit a high of $1.8480 a pound, the strongest price since December 1997. The contract rose 4.25 cents, or 2.4%, to settle at $1.8155 a pound.

While supplies of quality Arabica beans--the kind traded on ICE--are expected to be replenished when Central America and Colombia harvest their crops in the fall, nearby supplies remain tight, forcing prices higher, said Rodrigo Costa, vice president of institutional sales at Newedge in New York.

A lack of producer selling in the lightly traded market allowed prices to climb, with traders also making purchases before the ICE delivery period against the September contract begins on Monday, said Costa.

Soaring coffee values have forced roasters to hike prices.

U.S. coffee roaster J.M. Smucker (SJM), maker of Folgers coffee, in early August raised prices by 9%, while Kraft Foods (KFT), maker of Maxwell House, increased prices more than 10%.

Coffee buyers and sellers in Brazil, the world's largest coffee producer, tread cautiously this week as local and international bean prices climb.

"Roasters are concerned about high prices and cautious about buying at such high levels," John Wolthers, a trader at coffee exporter Comexim in Santos told Dow Jones Newswires.

In Brazil--the world's No.1 coffee exporter--prices have surged in tandem with sky-high international prices on ICE Futures U.S. In Brazil's spot market, arabica coffees continued to fetch high prices thisweek. A good arabica farmgate coffee (with 16% to 18% of defects) was trading at around 330 Brazilian reals ($188) per 60-kilogram bag on Thursday, Wolthers said. This compares to around BRL230 to BRL240 a year ago.

"It's a great time to be a producer, and a difficult time to be a roaster," he said.

Roasters have been holding off from buying as coffee prices remain high, but some may need to "bite the bullet" and makes purchases.

Some buyers are fixing their coffee purchases before the September contract on ICE expires, he said.

Fernando Mellao Martini, a broker from Mellao Martini Negocios em Cafe, said high coffee prices have surprised everyone. "There's much confusion in the market," he said.

Many producers have already sold good volumes of coffee and are focusing on delivering their beans.

High-level washed coffees continue to fetch around BRL380 to BRL400 per bag, he said. But even with those high prices, some producers are wanting even higher prices, he said.

ICE Change (cents) Range
Sep $1.8155 up 4.25 $1.7740-$1.8480
Dec $1.8505 up 5.20 $1.7955-$1.8650

16/08: ICE Coffee Rises On Tight Supplies, Charts

Arabica coffee on ICE Futures US rose Monday on fund buying linked to a weak US dollar and continued tight supplies of arabica coffee beans in the marketplace, with chart strength also applying upward price pressure, a broker says. Supplies of top-quality arabica beans are extremely tight before the Central American and Colombian harvests commence in the fall.
Coffee prices will likely ease from their elevated levels once the new 2010-11 crop is available and supply concerns ease, the International Coffee Organization says. Global coffee consumption in 2009 fell by 1.5% to 128.8 million bags, from 130.7 million in 2008, the ICO says. It maintained world production for the 2010-11 crop year in a range of 133 million to 135 million bags. Coffee futures attracted chart-based buying after the September contract rallied above Friday's high on its way to a two-week top of $1.8060 a pound. Volume is pegged at 33,373 contracts, with 8,002 calls and 5,952 put options traded. Nearby September coffee on ICE rose 3.20 cents, or 1.8%, to settle at $1.7870 a pound.

10/08: Sugar Futures Rise on Russian Drought Concern; Cocoa Falls, Coffee Steady

Sugar futures climbed the most in two weeks on concern Russia’s beet production will drop because of a prolonged drought. Cocoa prices declined, and coffee was little changed.

Russian sugar-beet output may trail forecasts by as much as 20 percent, the nation’s Sugar Producers’ Union said. The country may import about 1.8 million metric tons of raw sugar in 2011, the same amount as this year. Futures in New York tumbled 6.1 percent in the previous three sessions, partly on forecasts for higher production in Brazil and India.

“The Russian news is providing some support to the market,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock, a broker in Chicago. “The sell-off has been overdone.”

Raw sugar for October delivery gained 0.83 cent, or 4.7 percent, to close at 18.56 cents a pound at 2 p.m. on ICE Futures U.S. in New York. The price has tumbled 31 percent this year.

Refined-sugar futures for October delivery increased $10.60, or 2 percent, to $534.70 a ton on the Liffe exchange in London.

Cocoa futures for September delivery fell $109, or 3.6 percent, to close at $2,930 a ton in New York, marking the biggest drop since July 19. Earlier, the price touched $2,907, the lowest level since July 22.

Exports from the Ivory Coast, the world’s biggest producer, climbed 40 percent in June, according to data supplied by the ports of Abidjan and San Pedro. President Laurent Gbagbo said last week that farmers can double their output of cocoa and coffee without hindering planting of local staple crops.

In London, cocoa futures for September delivery fell 62 pounds, or 2.8 percent, to 2,123 pounds ($3,371) a ton.

In New York, arabica-coffee futures for September delivery were little changed at $1.6965 a pound. On Liffe, robusta-coffee futures for September delivery fell $16, or 0.9 percent, to $1,708 a ton.

06/08: Falls On Commodity Sales Following Jobs Data

Arabica coffee futures for September delivery fell Friday, pressured by a weak trade in commodities on softer-than-expected economic data and favorable conditions in top grower Brazil.

Nearby September coffee on ICE Futures U.S. in New York lost 2.45 cents, or 1.4%, to settle at $1.6740 a pound.

A weaker-than-expected July jobs report caused traders to shed riskier commodity assets, and coffee fell as a result.

Nonfarm payrolls fell by 131,000 in July, the U.S. Labor Department reported, more than the 60,000 jobs analysts had expected the economy to lose.

"Everyone was kind of pinning hopes on this report because if any of the [government] stimulus was actually helping it would have showed up by now, and people kind of threw in the towel on the jobs picture improving any time soon," said James Cordier, analyst and president of Liberty Trading Group in Tampa, Fla.

The unemployment rate held steady at 9.5%.

Despite the losses, coffee futures remained confined to their recent trading ranges, a broker said.

Traders are reluctant to press the market too low, with supplies of top-notch arabica beans out of Central America and Colombia remaining tight, he said.

Weather conditions in top coffee grower Brazil remain mild and supportive of the ongoing harvest. Producers there are seen holding back arabica supplies in the hope that prices will resume their uptrend.

Brazil's cyclically larger 2010-11 coffee crop is expected to total 45.8 million 60-kilogram bags, Brazil's Census Bureau said Thursday. The harvest began in May and is expected to run through October.

Coffee output from Colombia rose 35% in July to 787,000 bags, owing to favorable weather, Colombia's National Federation of Coffee Growers said Thursday. Colombian production is beginning to rebound after falling 32% in 2009 compared with 2008, due to adverse weather.

Colombia is the world's largest producer of mild, washed arabica beans--the kind deliverable against ICE coffee futures.

ICE warehouse stocks fell 951 bags to total 2.075 million bags, the exchange reported.

Total open interest on ICE rose 132 to 166,272 contracts.

Volume was pegged at 30,057 contracts traded, with 3,377 calls and 2,704 put options traded.

ICE Change (cents) Range
Sep $1.6740 dn 2.45 $1.6525-$1.7135
Dec $1.6870 dn 2.35 $1.6685-$1.7245

05/08: Inches Higher; Locked In Range

Arabica coffee prices drifted higher in range-bound trade Thursday.

Nearby coffee for September delivery ended 0.10 cent, or 0.60%, higher at $1.6985 a pound on ICE Futures U.S.

Supplies of high-quality arabica coffee beans are tight, and that situation supplied technical chart patterns that attract interest from speculative traders like banks and hedge funds. Two seasons of poor coffee harvest in Central America and Colombia--locations key to premium bean production--were quickly built into prices. Now the market is in a choppy holding pattern.

"We're trapped between producer selling at $1.80 and commercial support below $1.70," said Luis Rangel, vice president for commodities derivatives at ICAP Futures in Jersey City, N.J. "In the middle we're seeing a real lack of momentum and activity."

There is uncertainty about the amount of beans from Brazil, the world's top producer, that will be considered of high enough quality to meet roaster's standards. Beans from Colombia and Central America are typically of a higher standard than Brazil's.

Brazil's 2010-11 coffee crop is expected to be 45.8 million 60-kilogram bags, the agricultural survey group of Brazil's Census Bureau, the IBGE, said Thursday. Brazil, the world's No. 1 coffee producer, has a cyclically larger crop this year compared with last year. The harvest for arabica beans, the main export coffee, started in May and should run through September.

ICE coffee open interest--the number of active positions left at the end of the session-- decreased by 42 lots Wednesday to total 166,140 lots, according to exchange data.

Volume to the point of settlement was estimated at 23,671 lots, according to exchange data. In options, approximately 3,442 calls and 2,918 put options traded.

ICE Change Range
Sept $1.6985 +0.10c $1.6910-$1.7265
Dec $1.7105 +0.20c $1.7015-$1.7370

04/08: Higher As Funds Buy

NEW YORK, Aug 04, 2010 (Dow Jones Commodities News via Comtex) -- Coffee prices rose Wednesday from recent losses as speculators continued to drive volatile trade.

Nearby coffee for September delivery 3.10 cent, or 2%, higher at $1.6975 a pound on ICE Futures U.S.

Coffee prices have rallied 23% since June. Both fundamental and technical factors are driving the market, but fund interest seems to be the main catalyst in recent choppy trade. World supplies of high-quality arabica coffee beans are tight after two years of poor harvests in Colombia and Central America.

Though a bumper crop is flowing in from Brazil, there is indecision in the market as to whether those beans will be of sufficient quality to meet market demand. Available premium arabica supplies are tight, particularly ahead of the late fall harvest in the main origins of that coffee.

In the meantime, fund traders are pushing prices.

"Funds are looking for something to happen," said Sterling Smith, market analyst at Country Hedging in St. Paul, Minn. "Perhaps a major setback in production."

September coffee is establishing a new range from $1.60 to $1.80, Smith said.

"Prices can stay in this box for a very, very long time," he said.

ICE coffee open interest--the number of active positions left at the end of the session--decreased by 2,794 lots Tuesday to total 166,182 lots, according to exchange data.

Volume was estimated at 21,436 lots, according to exchange data. In options, approximately 8,980 calls and 1,983 put options traded.

ICE Change Range
Sep $1.6975 +3.10 pts $1.6760-$1.7170
Dec $1.7085 +3.20 pts $1.6850-$1.7270

03/08: Slides As Funds Sell In Volatile Trade

NEW YORK (Dow Jones)--Coffee prices sank Tuesday as technical chart cues directed speculators to sell.

Nearby coffee for September delivery settled 5.85 cents, or 3%, lower at $1.6665 a pound on ICE Futures U.S.

Despite Tuesday's losses, arabica coffee prices have risen 22% in the last two months. The market hit a 12.5-year high Monday. A dearth of high-quality beans combined with technical chart patterns originally attracted buying. A large amount of those premium arabica beans will be unavailable until the fall harvests in Colombia and Central America. Though Brazil--the world's leading coffee producer--is currently harvesting a crop, analysts are divided on the possibility that those supplies will be able to plug the gap in premium bean supplies for a third consecutive year.

Speculative traders, like banks and hedge funds, liquidated bullish long positions, and more selling was triggered as prices fell below $1.70, said Boyd Cruel, senior softs analyst at Vision Financial Markets in Chicago. The September contract has strong support at $1.61, Cruel said.

Commercial traders that use the market to hedge trade of physical coffee are only lightly participating in the volatile market, said Marcio Bernardo, a commoditites analyst at Newedge USA in New York.

"Everything else that is driving this market is funds," Bernardo said.

Volume was estimated at 29,475 lots, according to exchange data. In options, approximately 4,018 calls and 4,440 put options traded on the floor.

ICE coffee open interest--the number of active positions left at the end of the session--decreased by 422 lots Monday to total 168,976 lots, according to exchange data.

ICE Change Range
Sep $1.6665 -5.85c $1.6515-$1.7445
Dec $1.6765 -5.65c $1.6610-$1.7520

02/08: Eases From 12.5-Year High On Profit-Taking

NEW YORK (Dow Jones)--Coffee prices stumbled back from nearly 12.5-year highs Monday on indications the rally had outpaced the underlying fundamental picture.

Nearby coffee for September delivery ended 3.80 cents, or 2%, lower at $1.7250 a pound on ICE Futures U.S. In early trading the contract hit $1.8150, the highest level for a nearby coffee contract since Feb. 6, 1998.

Coffee prices have sky-rocketted nearly 25% since June 1. Two seasons of poor coffee harvest in Central America and Colombia--locations key to premium bean production--were quickly built into prices. A noticeable decline in exchange coffee stocks pushed prices higher, which attracted interest from speculators such as banks and hedge funds.

The market's mammoth move may have overestimated physical coffee supply and demand, said Spencer Patton, founder and chief investment officer at Steel Vine Investments in Chicago.

"The fundamentals just don't seem to justify this move up," Patton siad.

Coffee futures trading will likely continue to be a volatile affair until the market establishes a visible price range, said Spencer Patton, founder and chief investment officer at Steel Vine Investments in Chicago. The September contract has support near the $1.70--the point from which it broke higher last week, Patton said.

"Coffee just finally got into a profit-taking situation after the move we've had here," said Jack Scoville, vice president at Price Futures Group in Chicago. "Any retracement is going to look kind of ugly."

Scoville said producers in Central America have been fixing prices for the new crop, which weighs on the futures market as fresh short positions indicate more availability of beans in demand.

Brazil's arabica coffee harvest continues at a brisk pace, reaching 63% as of July 28, local agricultural consultancy Safras & Mercado said. Brazil's robusta coffee--typically used in blends--is 99% harvested as of July 28, Safras said.

ICE coffee warehouse stocks decreased by 6,426 60-kilogram bags Monday to total 2.1 million bags, according to exchange data.

ICE coffee open interest--the number of active positions left at the end of the session--decreased by 581 lots Friday to total 169,398 lots, according to exchange data.

Volume was estimated at 31,045 lots, according to exchange data. In options, approximately 6,970 calls and 6,415 put options traded on the floor.

ICE Change Range
Sep $1.7250 -3.80c $1.7205-$1.8150
Dec $1.7330 -3.50c $1.7280-$1.8155

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

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