US arabica coffee futures closed with only moderate losses on Wednesday pulling up from the fresh low dating back to October 23 set, as commercial buyers took advantage of the decline, dealers said.
"Coffee didn't do much today. It went lower. It hit a new low. I think the Brazilian export figures that came out yesterday didn't help much. It was higher than people were expecting," said one New York coffee dealer. Brazil released its coffee export figures after on Tuesday's close.
Shipments came in higher than many participants' projections, so pent up selling hit coffee on Wednesday. But dealers said activity was light, and a few commercial buyers came in at session lows to lift prices to their highs.
NYBOT's open-outcry benchmark May was down 0.80 cents at $1.1220 per lb by the close, but had fallen to a low last seen on October 23 at $1.1125. The session high was $1.13. July coffee ended at $1.1510, down 0.85 cent. Later-dated contracts finished with 0.75 to 0.95-cent losses.
On the ICE New York Board of Trade electronic platform at 2:23 pm EST (1923 GMT), May eased 0.80 cent to $1.1220 per lb. July was also down 0.80 at $1.1515. Whereas many coffee players bet that Brazil's coffee shipments would come in below 2.0 million 60-kg bags, instead they surpassed that forecast at 2.08 million bags shipped in January.
The Council of Green Coffee Exporters of Brazil (Cecafe) also reported on Tuesday that Brazil, the world's largest coffee producer, exported 1.88 million bags of green coffee in February, up 14 percent from 1.65 million bags last February.
"It was a little higher than people were expecting. Talk before the number was a little lower than 2 million bags. It came in at 2.1. It's not like a big difference, but it's becoming more difficult to find something bullish about coffee, at least in the short term," a trader said.
As a result, he added that some players using any reason at all to rid themselves of long coffee positions. Traders said origin has stayed out of the market waiting for pricier levels to sell their crop, which may help bulls take a stand.
Any buying to gain momentum, however, one trader said may coffee would need to close above $1.14 a lb, otherwise it should stay rangebound between $1.10 and $1.15. Weighing on prices are the options expiring on Friday, with a hefty number of puts, or sell options, open at the $1.10 level.
Traders said many players would remain sidelined until the April options expiration goes off the board on Friday. NYBOT estimated coffee futures volume at paltry 5,969 lots compared with a 20,603 tally on Tuesday. Open interest fell by 958 lots to 132,106 as of March 6.
In the options pit, calls were seen at 15,824 with puts at 6,405 lots. In London, robusta coffee futures closed lower as the market resumed its downtrend on fund selling. The Liffe May contract finished $7 a tonne lower at $1,485, and set a range spanning $1,470 and $1,491 a tonne. Weather forecaster DTN Meteorlogix said it expected favourable conditions to develop in top grower Brazil's major coffee regions. Temperatures were seen to near normal.
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