CSCE coffee futures settled higher on Wednesday on heavy speculative buying by funds, although stiff producer sales sharply pared the market's rally, brokers said.
July arabica soared 2.35 cents to close at 80.15 cents a lb, ranging between 78.30 and 82.15 cents.
On a spot basis, it was the highest close for coffee in about six months. September added 2.30 cents to 82.25 cents. Except for one contract, distant months rose 2.20 cents.
Mike McDougall, senior vice president of FIMAT USA Inc, said heavy fund buying combined with some tightness in coffee availability in leading producer Brazil to power the rally.
"The Brazilians dumped a lot of coffee once we hit those highs," a trading house broker said.
Speculative fund buying shoved arabica futures past initial resistance at 78 cents, triggering automatic buy-stop orders at that level and then at 81.40/50 cents, the brokers said. "It was all fund buying, (buy) stops.
It was going crazy there for a while," one said. The bulk of the buying was chart-based and was not tied at this time to weather frost concerns in Brazil. Private meteorologist Somar said in Sao Paulo that a cold front has sent temperatures plunging in Brazil's southern coffee regions, but there is no risk of frost.
It said most of the coffee areas in the key producing state of Minas Grease should see temperatures of as low as 4 Celsius (39 Fahrenheit) around dawn on Thursday and Friday.
Analysts said the funds would likely hang onto their long positions ahead of the upcoming US holiday weekend and with an eye on the start of Brazil's winter season in June.
The arabica coffee market will be shut on Monday, May 31, for US Memorial Day. Trading resumes on Tuesday. Technicians said resistance in the July arabica contract will still be at 81.40/50 cents, while support was pegged at 78.30 cents and in layers down to 75 cents.
Final estimated volume reached hefty 36,819 lots, up from the prior count of 25,030 lots. Call volume hit 11,437 lots while puts stood at 5,703 lots.
Comments
Comments are closed.