US arabica coffee futures settled with slight gains on Thursday, as speculative short-covering was seen halting a three-day slide in prices, analysts said. Despite heavy selling over the past two months, traders noted that oversold conditions amid steady increases in the market's open interest could trigger a short-covering rally.
"The fact that open interest has increased fairly dramatically over the last two weeks would lead us to believe a short-covering rally could be in the cards," said one. The New York Board of Trade (NYBoT) open-outcry May settled up 0.70 cent to $1.1055 per lb, after dealing between $1.0980 and $1.11.
July coffee rose 0.65 cent to finish at $1.1340, while the rest of the board ended up 0.50 to 0.70 cent. Trading in coffee futures and options will expand on Friday. Business in the open-outcry pit will begin at 8:30 am EDT (1230 GMT) and end at 12:30 pm, up from the old trading hours of 9:15 am to 12:30.
Fundamentally, a flood of Brazilian and Vietnamese supply coming into the market over the last two months has kept prices on the defensive, analysts said, but as the harvest gets marketed, that supply glut should abate.
"The world has really been awash with new supplies, however, coming in April and may, those supplies will slow down a little bit, giving coffee a chance to rally back some," said James Corridor, president of Liberty Trading Group in Florida.
Last week, the Council of Green Coffee Exporters of Brazil (Cecafe) reported that Brazil exported 1.88 million bags of green coffee in February, up 14 percent from 1.65 million bags last February.
Vietnamese coffee exports in the five months until February of the October 2006 to September 2007 crop year jumped 72 percent from a year to 10.3 million bags. On the ICE New York Board of Trade electronic platform at 2:12 pm EDT (1812 GMT), May was up 0.40 cent at $1.1025 per lb. July rose 0.45 cent to $1.1320. The New York Board of Trade estimated coffee futures volume just before the close amounted to 4,366 lots.
On Wednesday, final volume reached 16,532 lots. Open interest increased 1,018 lots to 137,488 as of March 14. In London, robusta coffee futures settled near their session highs on the back of speculative buying interest, dealers there said. The Liffe May contract ended up $25 at $1,508 per tonne, near the upper end of its session range between $1,483 and $1,510.
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