New York coffee gains

US arabica coffee futures closed mildly higher ON Tuesday on technical buying as London robust futures shot higher, though origin selling capped stronger gains here, traders said. "With the arbitrage having narrowed as tightly as it has, there's some natural buying in New York off the London arbitrage," one trader said.
"The funds carrying a record short position on gross side is really what's providing some discretionary support to the market." The NYBOT open-outcry benchmark July contract rose 0.45 cent to end at $1.0730 per lb. after dealing from $1.0675 to $1.0820. September gained 0.40 cent to $1.1010 and the rest rose 0.40 to 0.45 cent.
"Today's action was constructive but not overwhelmingly constructive," one broker said. On the IntercontinentalExchange New York Board of Trade electronic platform at 2:06 pm EDT (1806 GMT), July delivery was up 0.50 cent at $1.0735. Robust futures in London ended lower after the second-month contract scaled an eight-year peak, with global supply tightness remaining the key driver behind the rally, dealers said.
Liffe benchmark July ended down $6 at $1,666 a tonne after trading from $1,658 to $1,682. "Our market ran up a little bit on some short-covering after breaking through some chart points but funds are still short coffee," one dealer said.
It's a dangerous time to hold short positions in coffee as the frost season in top grower Brazil approaches, the dealer said. "I think they got a little nervous when they saw the charts break through recent highs (in London)," he said. NYBOT estimated 3,624 lots traded in open-outcry, compared with the total 14,398 contracts on Monday, when 10,806 contracts traded electronically.
Options calls volume was estimated at 4,444 lots with puts pegged at 3,561 lots. Even though New York coffee futures prices rose, the outlook for Brazilian coffee exports was sombre as the country's currency pierced the 2-per-dollar mark on Tuesday for the first time in six years, traders said. The real was trading at 1.989 per dollar in the afternoon after ending on Monday at 2.009 to the greenback.
And on the weather front, top grower Brazil will be mostly dry with the chance of some light showers amid warm temperatures through on Sunday, DTN Meteorlogix forecast.