US coffee futures edged up on Thursday as fund short-covering and roaster buying extended gains from the previous session, traders said.
"It looks like follow-through buying from yesterday," one trader said. "Also, there's been some heavy volume in switching between December and March," he said, referring to the two front-month future contracts.
The most-active December arabica coffee contract rose 0.90 cent or 1.2 percent to settle at 75.55 cents a pound on the New York Board of Trade, after trading from 74.40 to 76.05 cents.
March 2005 rose 0.80 cent to 78.45 cents, while longer-dated contracts rose 0.10 to 0.70 cent.
Traders said the two-day rally in futures could be consolidation from heavy fund selling in the week, which may have been related in part to fund liquidation from hedge fund Catequil Asset Management.
A feud between two partners of the New York-based firm has led to a lawsuit and a split. About $1.5 billion in assets will be returned to fund clients with the liquidation of Catequil Partners, LP and Catequil Overseas Partners, Ltd funds.
"The thought was that they (Catequil) were long in some way, because they were taking physical stocks," one trader said. "I think they've already gotten out of their positions." NYBOT estimated volume reached 19,937 lots, compared with the previous count of 20,629 lots.
Open interest in the coffee market fell 133 lots to 77,346 lots as of October 20.
Technically, one trader put support for the December delivery at 72.85 cents and resistance at 76.05 cents.
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