New York coffee eases on speculative profit-taking

Arabica coffee futures softened on speculative profit-taking on Thursday after news that major US roaster Folgers hiked the bulk of its retail coffee prices, said traders and analysts. The New York Board of Trade's most-active March arabica contract eased 0.10 cent to finish at 97.95 cents a lb, trading from 96.95 to as high as 100.50 cents, for the second time this week.
The March contract peaked at 102.50 cents on December 2, the highest level since July 2000. "There was a little bit of chorines. The market seems to be overbought and as soon as it goes over $1 there is a little bit of profit-taking," said a trader.
"But it's only 10 points off yesterday's settlement, so it's really still in a consolidation phase," he said. Folgers, the mainstream coffee brand of Procter & Gamble Co, boosted the price for its roast-and-ground coffee by 14 percent on Thursday in response to higher prices for green coffee beans traded on the commodity market.
Dealers and analysts said they were expecting the action since benchmark coffee prices have climbed by more than 35 percent from an October 20 low of 75.10 cents a lb. "Today was sort of 'buy the rumour and sell the fact,'" said Judy Ganes of J Ganes Consulting.
"The market has been anticipating this for some time, and it's out there now." "It might be the same thing tomorrow with the Brazilian government estimate. The expectation is for a fairly low figure," she said.
Brazil, the world's biggest coffee producer, is scheduled to release its first estimate for the 2005/06 (July/June) coffee crop on Friday, as well as a final forecast of the current harvest.
On Wednesday, private forecaster Safaris e Merced said Brazil's coffee crop next year would fall by about 17 percent to between 32.9 million and 35.2 million 60-kg bags.
Other estimates have ranged from 30 million to 40 million bags. Brazil's last official forecast for the 2004/05 crop was at 38.3 million, while the US Department of Agriculture last projected Brazil's crop this season at 41.7 million bags.
On the charts, traders put technical support for the March contract at 96.95 cents and then at 95.25 cents, with resistance at 100.50 cents. Final estimated volume in coffee reached 14,320 lots, down from 16,689 lots the previous session. Open interest rose by 1,740 lots to 107,532 lots as of December 8.