Arabica benchmark coffee futures finished on Thursday with hefty gains as speculators and locals bought throughout the session and more aggressively heading into the close, traders said.
"We opened higher and continued spec buying came into the market. It kept chipping away at the highs but was not able to extend them beyond on Wednesday's high.
The market went out looking pretty good," said one coffee dealer. "We had an aggressive settlement and it looks like locals went home longer, expecting the market to come in higher." The New York Board of Trade's arabica coffee contract for December delivery finished 1.90 cents higher at $1.1055 a lb. It pushed up to $1.1085 a lb, but failed to reach the September 6 peak hit on Wednesday at $1.1120.
It set a higher low at $1.0910 a lb. March coffee futures jumped 1.85 to close at $1.1465 per lb. Other contracts settled 1.70 to 1.90 stronger. NYBOT estimated on Thursday's final tally of arabica trades at 17,386 lots, less than on Wednesday's 25,385-lot count. Some traders noted that each time sellers came in the market bounced off support at $1.0950 a lb for December coffee and was able to rally a bit higher.
They reported seeing some selling from Brazilian and Colombian coffee growers, but added that the selling might have been even heavier if not for the holiday in Brazil. On Thursday, Brazil's financial and commodities markets were closed for a national holidays and will reopen on Friday.
Noting the strong buying heading into the close, one trader said he thought some players were setting up for a new near-term high on Friday. "It looks like they're going to try to take out the $1.1120 area at tomorrow's on Friday's open, but the problem is we're getting into overbought territory," said one dealer.
One technician said some people were looking at the charts and seeing a bottoming formation, and warned that sellers might come in at any new highs on Friday and grab profits.
"I would not be surprised to see some run on some stops at that area ($1.1120 a lb on December futures), and then the market starting to settle back into lower numbers at the end of the day with some end-of-the-week profit taking," the dealer said.
US weather service, Meteorlogix, said Brazil's weather should bring scattered showers and thunderstorms, with rainy episodes occurring nearly every day for the next week. Brazil is the world's largest coffee producer.
Costa Rican coffee production will likely total 1.852 million 60-kg bags during the 2006/2007 harvest, a 3.7 percent rise on the previous cycle, the Costa Rican Coffee Institute (Icefall) said on Thursday.
Late on Wednesday, the Costa Rican Coffee Institute said Costa Rica's green coffee exports were up 18.5 percent year on year to 45,599 60-kg bags in October, the first month of the 2006/07-coffee year. In London, robusta coffee futures closed with healthy gains, boosted by fund buying. The benchmark Liffe January contract closed $21 higher at $1,549 a tonne and November coffee closed with $12 gains at $1,535.
Coffee exports from Vietnam, the world's second-largest producer after Brazil, are expected to be little changed from year ago levels at 2.2 million bags for the last two months of 2006, industry figures showed on Thursday.
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