DJ ICE Coffee Review: Rises Marginally In Consolidation

ICE Futures U.S. arabica coffee rose marginally Monday as futures continued to consolidate near support from recent lows. Most-active May coffee settled up 55 points, or 0.4%, at $1.3175 a pound. Analysts said coffee is primed to move within its recent trading range as fundamental news is light as the market moves into a seasonal lull.

« We’re just going to move between 1.28 and 1.34 [basis May], keeping an eye on what’s going on macroeconomically, » Alonso Tomas, trader at Hencorp Becstone Futures in Miami. Coffee prices escaped the pressure that weighed on the sugar and cocoa market Monday due to the stronger dollar. Tomas said coffee was not a candidate for losses as recent selling has kept future prices low.

Coffee prices have retreated 11% from the Jan. 11 high as traders turn to technical chart indications for trading cues. Analysts said seasonal coffee demand has died down as winter closes. Expectations for a bumper crop from Brazil, the No. 1 world coffee producer and exporter, are also keeping prices lower as traders await an influx of beans when that harvest begins in May and June.

Analysts said that world coffee stocks are tight, but ICE prices don’t strongly reflect that status amid a poor harvest season in much of Central and South America. ICE futures are the baseline for arabica differentials, or the premium or discount that physical coffee traders for on the cash market.

« It’s a slow time of the year here for this market, » said Boyd Cruel, senior softs analyst at Vision Financial Markets in Chicago. Speculative fund traders continue the trend of exiting bullish ICE coffee positions in recent weeks.

Money managers reduced their net long position in ICE coffee futures and options to 5,544 lots in the week to Feb. 23 from 7,326 lots the week before, according to data from the Commodity Futures Trading Commission’s commitments of traders report released Friday.

Traders are looking at Europe’s handling of Greece’s debt woes for indications on the macroeconomy. February unemployment data scheduled for release Friday will also give cues to the state of the U.S. economy.

Source : FutureSource