DJ ICE Coffee Review: Futures Decline As US Dollar Rallies

A strengthening U.S. dollar combined with a sell-off in gold futures to produce selling pressure that pushed U.S. coffee futures to a lower close Tuesday. March arabica coffee on the ICE Futures U.S. exchange closed down 315 points at $1.4245 a pound. May futures closed down 305 points at $1.4420.

The U.S. dollar index, a basket of six major currencies weighted against the greenback, hit a fresh 3 1/2-month high Tuesday, which put selling pressure on many commodity futures markets, including coffee. Also, gold futures prices fell to a fresh seven-week low, which was also psychologically negative for commodity markets, said an analyst.

Commodity-fund long liquidation has been featured recently after March coffee failed to push above key technical resistance at $1.5000, said Boyd Cruel, market analyst with Vision Financial. « Look for sideways to lower trading for coffee into the end of the year, » said Cruel, adding the coffee market’s uptrend could resume in January.

In London trading Tuesday, Liffee robusta coffee futures were slightly lower in thin volume, which makes the market vulnerable to sharp moves like the sell off Monday. « Robusta hit a black hole » in afternoon trading Monday, said Sucden.

In market news, Brazilian green coffee exports for Dec. 1-21 came in at 1,262,104 bags of 60 kilos each, according to preliminary figures from Brazil’s Cecafe. That’s down from the 1,315,468 bags exported during the same period in November.

Weather in Brazil has recently seen favorable conditions for the budding coffee trees, with drier weather deemed beneficial for the crop, said Meteorlogix weather.

Source : FutureSource