Arabica coffee futures clawed back from losses to end higher on Tuesday for the third consecutive session, buoyed mainly by roasters adjusting their positions, traders and brokers said. "Roaster buying into negative territory caused the day traders to cover their short positions," said one broker, adding that small funds also had a presence in the market. The New York Board of Trade's benchmark March arabica contract ended up 0.45 cent at 105.80 cents a lb, near the top of a 103.30 to 105.90 trading range.
May gained 0.50 cent to 108.20 cents and the rest settle up 0.50 to 0.90 cent. One trader said the spurt of buying late in the session could be followed through tomorrow. "I think that's what a lot of the locals are betting on we will have to see.
It will be an interesting tomorrow," he said. Arabica futures have been volatile since the benchmark March delivery peaked at 108.70 cents on December 21, which is about a 48 percent rise from prices in August and the highest level seen in more than four years.
While many analysts expect a supply deficit in the 2005/06 season, there is uncertainty about future supply. Brazil, the world's biggest producer and exporter of coffee, faces a drop in supply this year largely because of a downturn in the country's biennial crop cycle.
Meanwhile, market players have started to focus on rolling out of the front-month March arabica contract and into May, the next active month, ahead of the March deliveries first notice day on February 17.
On Monday, open interest in March fell 437 lots to 66,512 contracts, while may rose 1,101 lots to 25,388 lots. Estimated volume reached 19,269 contracts from Monday's official count of 11,784 contracts.
On the charts, traders pegged technical support for front-month March at 103.30 and then 102.50 cents, with resistance at 106.25 cents, 106.70 and 108.10 cents.
In London, Life's benchmark March robusta nudged down $1 to close at $766 a tonne after turning over 6,512 lots in a $772 to $760 band.
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