New York arabica coffee futures closed on Monday with steep losses, falling to levels last traded in early November, as funds continued their pattern of bailing out uncontested near session's end.
"Funds sold today on technical factors when the market broke down below 95.15 (cents a lb) basis spot September. The settlement at 94.05 was below the primary technical support of 94.40, which means additional technical and momentum sellers are expected in the near term," said one
New York Board of Trade arabica coffee for September delivery closed down 1.55 cents at 94.05 cents a lb, and slid to 93.95, its lowest level since early November 2004.
The rest of the board finished from 1.35 to 1.50 cents lower, with most contracts setting life-of-contract lows for the second day in a row. Traders said roasters had been buying coffee while prices fell. But, with more selling forecast, some players said they thought the roasters would hold off on their purchases until the market began showing clearer signs of bottoming.
"Industry buyers had been in the market in fairly good numbers. However, those bids are expected to wane if the market trends further lower. Bottoming action has not yet been seen here," a coffee dealer said. Technical factors continue to dominate. Traders said supply and demand fundamentals have changed little in recent sessions.
In a daily report, Brazil's private forecaster Somar said Monday that the coffee belt in the world's No 1 producer will have hot and dry weather this week, which is favourable to the current harvest. It added that nights will remain cold in the mountains, but not enough to create a frost risk.
In the US, weather forecaster Meteorlogix also said conditions remain favorable for Brazil's ongoing harvest, and it sees no damaging cold this week. Private Brazilian analysts Safras e Mercado said Monday that Brazilian farmers had picked 55 percent of an estimated 43.5 million 60-kg bag 2006/07 (July/June) coffee crop by July 19, compared with 57 percent at the same time last year. The tally compares with 48 percent picked a week ago.
Analysts said the Brazilian harvest was trailing last year's pace, but arabica producers have been waiting for coffee cherries to mature fully and this year's larger crop left little space on the drying patio.
Coffee futures in Sao Paulo were down 1.24 to 3.0 percent in late Monday trade. In Guatemala, the International Coffee Organisation said coffee stocks in producer countries have dropped to about 10 million 60-kg bags, and consumers were using up their own stocks, putting pressure on prices.
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