CSCE coffee futures closed lower on Wednesday as bullish traders decided to let prices fall, easing off the 4.7 percent rally staged on Tuesday, brokers said.
"There wasn't anything to sustain the bull move from Tuesday. Improving trade estimates about the Brazilian crop for 2004/05 are likely to temper any advance," said a coffee analyst referring to the world's largest crop.
The active May arabica future fell 0.60 cent to close at 74.15 cents per lb, within a 73.85-74.90 cents range.
"The market had a strong advance on Tuesday, so a pullback is normal for a market that is near the middle of a 70 to 80 cents trading range," said one broker.
Talk about the March deliveries resumed on Wednesday as 298 delivery notices were tendered against spot March future.
Traders said 203 notices came from Rand Financial, the firm that took delivery of approximately 4,000 contracts in the past 12 months for a fund.
Dealers said that while there were some orders above the market to sell from Brazil, traders there were stretching out their pre-Lenten Carnival holiday.
The spot March future slipped 0.65 cent to settle at 72.45 cents and the back months-finished 0.45 to 0.75 cent lower.
Volume slowed sharply to just 8,436 lots on Wednesday from the 15,723 contract pace seen on Tuesday.
Some 4,233 calls and 2,033 puts were traded in the neighbouring option pit.
In fundamental news, Peru's 2004 coffee production could reach 4 million 100-pound (46-kg) bags if a government-backed plan to reduce pests on plantations is successful, a senior coffee official said on Wednesday.
Industry estimates see production of 3.74 million bags of coffee in the 2004 season, slightly higher than in 2003 but below a bumper 2002 crop of 4.1 million bags, according to the Peruvian Chamber of Coffee, which represents exporters.
Technicians raised support for May to 73.10 cents and then 72.75 cents with resistance at 75 cents and 75.65 cents.
"The move between late January and late February is corrective in nature and suggests prices will be higher looking forward.
Our target is still 90 cents, while 69 cents is critical support basis May," said Dan Chesler, a commodity-trading advisor. CSCE is a subsidiary of the New York Board of Trade.
Comments
Comments are closed.