US coffee futures ended on positive ground on Monday, thanks to scale-down roaster buying and speculative short covering from a new two-month low hit in the session, market sources said.
"We hit some roaster buying which supported the market, and we had some local short covering," said Boyd Cruel, senior soft analyst at Learn Trading. The New York Board of Trade's (NYBOT) active March arabica contract rose 1.10 cents to settle at 95.85 cents a lb., after trading from 94 cents to 96.20 cents.
The bottom trade was the weakest price for the contract since September 30. May arabica advanced 1.05 cents to end at 98 cents a lb., and back-month Arabic's finished up 1.05 to 1.40 cents. NYBOT final coffee volume was estimated at 10,895 lots, vs. 11,549 lots officially tallied on Friday.
Traders said the market had little reaction to relatively steady coffee data released by the US Department of Agriculture on Friday, after the coffee market was closed. In its quarterly Tropical Products report, the USDA forecast world coffee output at 113.2 million 60-kg bags in the 2005/06 marketing year, up from a previous forecast of 113.1 million bags.
But it revised top coffee producer Brazil's 2005/06 output down to 36.1 million bags from a June forecast of 36.5 million bags. "I think a lot of people anticipated the numbers, and there was no big change to the numbers," said a trader.
During the first half of November, the arabica coffee market had been buoyed by market worries about supply tightness due to crop losses and supply damage caused by natural disasters in the Americas over the past few months.
On November 9, the March arabica contract hit a three-month peak at $1.1240 a lb. Prices have since retreated amid weakening technical signals on the price charts and improving weather conditions for next year's crop in Brazil.
Last month, US green coffee trader Merton Coffee Corp estimated Brazil's 2006/07 (July/June) crop between 44 million and 48 million 60-kg bags. Brazil's crop agency, Confab, is expected to issue a preliminary estimate for 2006/07 crop on Friday.
Confab last put the 2005/06 crop at 33.3 million bags. Brazil's coffee production generally shifts from year to year due to the Arabic's biennial crop cycle.