DJ ICE Coffee Review: Higher As US Dollar Weakens

Arabica coffee futures closed higher Tuesday largely in response to the softer U.S. dollar. Lightly traded March coffee settled up 170 points, or 1.32%, at $1.3035 per pound on ICE Futures U.S. Most-active May coffee closed up 170 points, or 1.30%, at $1.3275.

« Coffee is enjoying some dollar weakness as much as anything, » said Jack Scoville, vice president with Price Futures Group. A weaker greenback tends to support commodities by making them cheaper in other currencies, thus potentially helping demand. Shortly before coffee trading closed, the ICE March dollar index was down 0.395 point to 80.105.

The euro climbed against the dollar after ratings agency Standard & Poor’s announced it had taken fiscally strapped Greece’s debt off its ratings watch.

Meanwhile, Scoville said, there are signs of tighter supplies, with coffee from Central America scarce. The International Coffee Organization earlier this month revised down its estimate of 2009-10 global coffee output, partly due to a disappointing crop in Colombia. Meanwhile, the harvest in Brazil hasn’t yet begun and is at least a month away, Scoville said.

Source : FutureSource