US coffee futures extended losses on Tuesday for the second day in a row as speculative funds sold on improving crop prospects in top grower Brazil, traders said. "A lot of people are talking about the flowering trees in Brazil," one trader said.
"It makes the buyers a little more sceptical here." On the New York Board of Trade, the most-active December arabica coffee contract shed 0.90 cent to settle at 72.95 cents a pound, near the low end of a trading range of 72.85 cents to 73.70 cents. March 2005 fell 0.95 cent to 76.15 cents, while longer-dated contracts slid 0.55 cent to 0.90 cent. Speculative funds continued to dominate trading activity, with roasters buying on price dips, traders said.
On the weather front, lingering showers in Brazil's main coffee areas of Sao Paulo and Minas Grease during the next seven days will favour tree flowering for next year's crop, weather service Meteorlogix said in its daily outlook.
The latest official estimates for Brazil's 2004/05 crop, which has almost ended, were for 38.26 million bags, the International Coffee Organisation said in its recently published September report.
"It should be noted that preliminary indications for crop year 2005/06 are that there is likely to be a cutback in Brazilian production since flowering has begun than usual and there could be some damage to the crop.
"However, initial estimates to be published in December will provide a clearer picture," it said. The ICO kept its total world-wide 2004/05 crop estimates unchanged at 112 million to 114 million bags.
NYBOT estimated volume reached 7,562 lots, compared with the previous count of 6,728 lots. Open interest in the coffee market rose 131 lots to 77,115 lots as of October 18.
Technically, traders put support for the December delivery at 72.75 cents and then 72.50 cents, with resistance at 74.50 cents and then at 75 cents.