DOW JONES NEWSWIRES
Arabica coffee futures fell from their perch Monday after profit-taking and light origin selling combined to knock values toward session lows by the close.
Nearby December coffee rose 115 points to settle at $1.4005 a pound on ICE Futures U.S.
Renewed U.S. dollar weakness combined with gains in crude oil and precious metals sparked gains in the commodity indexes, which in turn lifted coffee futures. Concerns about the Brazilian and Colombian coffee crops, coupled with flooding in Vietnam, provide underlying market support, brokers say.
"I think we're seeing dollar weakness more than anything else," said Jack Scoville, analyst and vice president at Price Futures Group.
"The market remains overall tight, and I think there are some legitimate concerns about what's going on in Brazil.
Also Colombia's been having lower-than-expected rains that could hurt flowering," he said.
Wetter-than-normal weather in Brazil is producing uneven flowering that may lead to yield losses, analysts and brokers said.
In Colombia, drier-than-normal conditions and reduced fertilizer use are expected to cut into that crop. Colombia's coffee output for calendar year 2009 is expected to total just 8.3 million bags, down from 11.487 million in 2008 and down 25% from 12.607 million in 2007, the chief of Colombia's National Federation of Coffee Growers, or Fedecafe, said Friday.
This marked the fifth time Fedecafe had lowered production for the current crop year.
Global coffee production may fall below 2008-09's estimated output of 128.1 million bags because of adverse weather in
Brazil and Vietnam, the International Coffee Organization said Monday. A combination of lower output and decreased stock levels in producing countries may lead to declining exports in 2009-10.
The ICO maintained its estimate for world 2008 coffee consumption at 130 million bags.
Traders continued to spread trade the December and March contracts, mostly buying March and selling the December, ahead of first-notice day on Dec. 19, a broker said.
Managed money accounts, essentially the funds, shed 1,064 shorts and 259 longs from ICE coffee futures and options in the week ended Nov. 3, taking their overall net long position to 31,932 lots from 31,126 the previous week, the Commodity Futures Trading Commission's Commitments of Traders report showed. Funds are 19.9% net long versus 20.3% last week.
The move to decrease shorts came as December coffee futures fell, then rallied to $1.4310 on crop concerns, technical indicators and speculative buying linked to rising commodities and a weak dollar.
Weather conditions in top grower Brazil are expected to improve somewhat this week.
Episodes of light showers, with locally heavier showers expected Wednesday through Friday, will benefit the flowering and budding trees in Brazil, private forecaster DTN Meteorlogix said.
ICE warehouse stocks continue to contract, falling 2,211 bags to total 3.192 million 60-kilogram bags, the exchange reported.
ICE open interest fell 1,443 to total 128,054 lots, the exchange reported.
Volume is pegged at 28,087 lots traded, with 5,759 calls and 1,811 put options traded.
ICE Change Range
Dec $1.4005 up 115 $1.3910-$1.4225
Mar $1.4315 up 120 $1.4200-$1.4525
-By Tom Sellen, Dow Jones Newswires; 913-322-5177; tom.sellen@dowjones.com
(END) Dow Jones Newswires
11-09-09 1529ET
Copyright (c) 2009 Dow Jones & Company, Inc.
