New York coffee futures slip as market consolidates

US coffee futures sagged nearly 1 percent on Thursday after fund selling curbed this week's big gains which were fuelled by dry Brazilian weather and crop damage in hurricane-stricken Central America, market sources said.
"There was some fund selling which stopped the market from going higher," said Rodrigo Costa, vice president of institutional sales at Fimat USA.
"Right now it's just a consolidation market where funds on both sides are adjusting their positions," he said. The New York Board of Trade's active December arabica contract shed 0.95 cent to settle at $1.0035 a lb., after trading from 99 cents to $1.0110.
March likewise eased 0.95 cent to end at $1.0345 a lb, while back month arabicas declined 0.95 to 1.0 cent. Fears of extensive crop damage in Central America dissipated when an industry report suggested that El Salvador's coffee losses after Hurricane Stan and a volcanic eruption should not exceed 2 percent.
Sergio Gill, head of research group Procafe, said crop damage would not be as severe as in Guatemala, where up to 6 percent of the harvest may have been lost to landslides and flooding caused by Hurricane Stan.
Harvest is still several weeks or a month away for the bulk of the coffee in the region, but some roasters are concerned about delays due to structural damage to roads, bridges and coffee mills.
"The roasters are thinking there could be a logistical problem," said a trader. One US coffee buyer anticipated harvest delays of up to two months.
He projected crop losses in El Salvador, Guatemala and southern Mexico at about 375,000 60-kg bags, or about 0.3 percent of the 108 million bags in 2005/06 world output forecast by the International Coffee Organisation.
Meanwhile, US forecaster Meteorlogix predicted dry conditions with a few light showers in Brazil's main growing areas of Sao Paulo and Minas Grease during the next seven days.
"Hot, dry weather in Sao Paulo and Minas Grease, Brazil, reduces soil moisture and increases stress on the flowering trees," it said in its latest statement.
Brazil produces anywhere from 30 percent to 40 percent of the world's coffee output, depending on the country's crop cycle. Coffee futures trading volume on the NYBOT declined to an estimated 10,168 contracts from the 13,447 lots officially tallied the previous session.