CSCE arabica coffee futures closed softer on Monday as players liquidated positions partly due to news that top producer Brazil remained frost-free over the weekend, analysts said.
CSCE July arabica tumbled 1.95 cents to conclude at 81.05 cents a lb, dealing between 80.80 and 82.75 cents. September lost 1.85 to 83.35 cents. Back months sank 1.45 to 1.85 cents.
James Corridor, an analyst for Liberty Trading Group, said the market would normally steady up ahead of the weekend during Brazil's winter season but then sell off on Monday to Tuesday if the coffee belt there stays frost-free.
"People are afraid to be short on Thursday and Friday," he said, adding the situation changes when the "backside of the weekend" comes up.
The speculative sales deflated bean prices down to there lows for the session before trade and speculative short-covering enabled arabica prices to pare their losses somewhat, traders said.
Fundamentally, the market is still looking at more than ample supplies of coffee although rains have hindered the bean harvest in Brazil. Forecaster Somar said Brazil's coffee regions should be drier and warmer this week.
Another cold front will reach south-east Brazil on Friday, but there is no threat of frost. Forecasters Meteorlogix said a cold airman is seen building up in central Argentina later this week but the high is expected to pass to the south of the coffee belt.
"It appears that the delivery pattern to bring the cold air northward into the coffee belt is not strong enough to raise concerns about a damaging freeze," it said. Technicians placed resistance for the July arabica contract at 85 and 86.50 cents, while support was at 80 cents.
Final estimated volume reached 18,920 lots, from the prior count of 18,352 lots.
Call volume hit 4,628 lots while puts stood at 4,053 lots. Open interest in the arabica coffee market rose 482 lots to 117,130 lots as of June 4. The CSCE is a subsidiary of the New York Board of Trade.
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