US coffee futures ended in negative territory on Tuesday, backing down from a two-week peak hit in the session after speculators took profits and producers increased their sales, market sources said.
The New York Board of Trade's (NYBOT) active March arabica contract fell 1.40 cents to settle at 98.30 cents per lb., having dealt from 98 cents to 101.20 cents. May arabica lost 1.35 cents to end at 100.50 cents a lb., while more distant Arabic's erased 1.30 to 1.45 cents.
"If you look at the charts, there was some good resistance (in the March contract) at 100 and 101, so I think we had some profit taking up there and perhaps some producer selling," said Jack Scoville, a vice president at the Price Group.
On Tuesday's peak of 101.20 cents a lbw, the benchmark arabica price was 5.5 percent higher than on Friday's closing price of 95.90 cents. The recent price gains were fanned by renewed worries about a supply shortage during the 2005/06-crop season, particularly from top coffee producers Brazil and Vietnam.
"Factors relating to supply seem to be supporting the current trend in prices," according to a report issued by the International Coffee Organisation on Tuesday. The ICO projected 2005/06-world production at 108 million 60-kg bags while demand was seen at 115 million bags.
But global coffee output was expected to pick up for the 2006/07 season, thanks to increases in production from leading coffee producer's Brazil and Vietnam, it said. The ICO pegged global coffee production for the 2006/07 season within a range of 118 million to 122 million bags. "At this stage it should be seen as an initial estimate and indicates, with global consumption likely to exceed 118 million bags, a small surplus," it added. "I don't think there is any huge surprise in the ICO numbers," said Scoville. He said coffee roasters would continue to question whether they will have adequate coverage in the 2006/07 season even if recent Brazilian government estimates showed the world's No 1 coffee grower turning out some 42 million bags next year.
Boyd Cruel, senior softie's analyst at Learn Trading, said the arabica market was facing "a little technical setback". He said Brazilian crop estimates, which are at the lower end of market expectations, are "giving this market its base right now."
In London, the Life's active March robust contract concluded at $1,192 a tonne, down 0.7 percent from Monday's stellar gains of more than 7 percent.
NYBOT arabica futures trading volume reached an estimated 9,469 lots, down from the 11,798 lots officially tallied the previous session.
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