Arabica coffee futures settled narrowly mixed on Wednesday after a quiet session marked by thin turnover. Still, lingering concerns about tight robusta supply and unfavourable crop conditions in top grower Brazil kept the market from falling below the previous session's bottom trade, traders said.
The New York Board of Trade's arabica coffee contract for December delivery ended up 0.05 cent at $1.1035 a lb after trading from $1.0920 to $1.1120 the loftiest price since August 25.
March arabica likewise gained 0.05 cent to conclude at $1.1415 and back months finished up 0.05 cent to down 0.10 cent. Estimated arabica futures turnover fetched a low 9,591 contracts, down from the 13,418 contracts officially tallied the previous session. "It (market) continues to be supported due to the London situation as well as concerns about weather in Brazil even though I haven't heard these concerns voiced openly by my Brazilian clients," said a coffee trader at a commodity trade house.
"As long as we stay above $1.10 (in December) then I guess you have to be positive about the market," he said, adding, "but today was light on the volume." In London, the Life's benchmark November robusta contract finished up $6 at $1,590 a tonne, or 72.12 cents a lb. Front-month September robusta settled down $24 at $2,000 a tonne, or 90.72 cents a lb, after touching a peak of $2,063, its highest since November 1998.
The large premium in the Life's front-month contract over November reflects near-term supply tightness for the robusta bean, which is used mainly for soluble coffee. Meanwhile, the higher-quality arabica beans have been creeping up in recent days because of market worries about poor weather conditions for the development of Brazil's 2007/08 crop.
Recent rainfall in Brazil has helped to improve conditions for the upcoming spring flowering of the trees, but more rain will be needed in the coming weeks, according to US forecaster Meteorlogix. It predicted mostly dry conditions for the next seven days.
"We have to see what the rainfall cumulating look like over the next couple of weeks and if that continues to be a problem then the New York market will move up on its own," said a coffee trader at a New York-based investment bank.
A light ground frost was seen on some properties in Brazil's main coffee region in South Minas Gerais state, with temperatures ranging from 3 to 5 degrees Celsius (37-42 Fahrenheit), industry workers said on Wednesday.
Traders said it was too soon to determine the extent of any frost-related damage. But any crop damage from either frost or drought could hit the 2007/08 crop, which is already seen significantly smaller than the 2006/07-crop year's expected 41.6 million 60-kg bags.
"(The) area impacted (from frost) though is small relative to total production but any loss matters next year because market balance is so precarious," Judith Ganes of J Ganes Consulting told Reuters.
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