US coffee futures firmed just under one percent on Thursday, boosted by speculators buying back their short positions amid signs that the selling pace of producers earlier this week had slowed, traders said.
The New York Board of Trade's washed-arabica contract for May delivery rose 0.75 cent to settle at $1.0490 per lb, having dealt from $1.0370 to $1.0570. July gained 0.80 cent to $1.0765 and back months also climbed 0.80 cent.
"We didn't get below $1.0350 which was the low from yesterday," said a coffee trader at a brokerage house. "Origins have been sellers, but they are not aggressive," he said, attributing today's gain to fund buying and short-covering.
"Industry have been buyers. When the market comes off they've been buying it, but they haven't been buying aggressively," he added.
On Wednesday, origin selling helped knock down the benchmark contract to its lowest price in about three months.
Technically, one trader pegged key support in the May contract between $1.0350 and $1.03 with resistance between $1.08 and $1.10.
"If the market breaks below $1.03, then we can see a deeper correction to below $1," he said. The last time the May contract dipped below $1 was on December 16, 2005.
On the fundamental front, world coffee output in the 2006/07 year is expected to reach about 121 million 60-kg bags, putting supply close in balance with demand, according to the latest estimate from the International Coffee Organisation. In the 2005/06 season, the world faced a coffee supply deficit by several million bags.
Trading volume amounted to an estimated 11,566 lots on NYBOT, below the 18,799 lots officially tallied for Wednesday.
Open interest on March 22 rose 1,637 contracts to 101,368 lots, exchange data showed.
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