Arabica coffee futures finished on Friday with strong gains amid general commodity market buying after the dollar fell sharply against the euro, traders said. The March arabica coffee contract settled 1.90 cents, or 1.67 percent, stronger at $1.1580 per lb.
Earlier, it ran up to a week long peak at $1.1750 from a $1.1565 per lb. March volume picked up to 7,485 lots by the end. The market trades until 2:45 pm. Coffee rallied with other commodities across the board when the dollar slid against the euro - traders. "I think it had to do with the (falling) dollar. It had to do with more support for agricultural commodities as a whole, and coffee specifically is going into a deficit year," said Rodrigo Costa, vice-president Institutional Sales for Newedge USA in New York.
This is the smaller production year for Brazil's bi-annual coffee crop trend, with about 40 million bags forecast for this crop year versus 50 million bags last year. The dollar fell when the US consumer price index dropped by more than expected, leaving room for US interest rates to remain historically low. Commodity investors jumped back into raw materials across the board as confidence was bolstered following news of new US government aid going out to banks - Costa.
The dollar also weakened as fresh government bailout money for US banks eased some investor concerns about stress in the financial sector. Chartists see resistance around $1.20 per lb and support around $1.10 per lb for March futures. Arabica March futures rose 1.85 cents, or 1.60 percent, to $1.1575 per lb.
Scattered showers and thundershowers forecast to bring 0.3 to 1.50 inch of rain over the next week in top grower Brazil - DTN Meteorlogix. Conditions favourable to budding crops in Brazil growing regions. Total volume Thursday was light at 9,376 lots -ICE data. Open interest by January 15 rose to 126,156 lots from 125,738 lots previously - exchange data.
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