US arabica coffee futures gapped lower at the open on Thursday and quickly slid to an eight-day low, but buyers rushed in at the bottom and sent prices to a close near session highs, traders said.
Traders said New York prices were mostly mirroring the action in London, where fund and speculative selling sent prices sharply lower. "There was a decent amount of selling, a sharp price decline at first. London was pretty much the reason on some fund long liquidation," said one New York coffee trader.
He added that prices lost about 150 points before the open-outcry session, and a series of stop-loss sell orders was triggered once the exchange floor went into action.
The NYBOT open-outcry benchmark may contract trimmed its steep losses to end down 1.90 cents at $1.1660 per lb. The session range extended down to $1.15, its lowest level since February 21 and then climbed to the session high at $1.1720, before easing into the settlement.
Spot March coffee finished 1.70 cents lower at $1.16, after slipping to a $1.14 low. The rest were off 1.85 to 1.90 cents by the end. On the ICE New York Board of Trade electronic platform at 2:44 pm EST (1944 GMT), March coffee traded with 1.60 cents declines at $1.1610 a lb, while benchmark May fell 2.20 cents to $1.1630. Traders noted that coffee futures bounced fairly quickly off session lows, as bullish speculators and some trade buyers took advantage of the lower levels.
"Is this a bearish signal?" asked one coffee dealer. "It depends on which way you want to look at it. It ended closer to the highs, but it got fairly close to the recent lows," said one trader. He added that a break below $1.1430 a lb on NYBOT's May coffee chart would reinforce the downward trend that began in mid-December. "Right now, I'm pretty neutral towards the market. I was friendly last week, but I started losing that friendly feeling at the beginning of this week.
I'm not saying that I'm unfriendly, but if we start travelling below the recent low (February 21) then we're going down to even lower territory," a coffee trader said.
NYBOT final coffee futures volume was estimated at 10,140 lots compared with 16,420 lots recorded on Wednesday. Open interest rose by 1,775 lots to 129,905 on February 28.
Options volume continued to be heavy, with calls at 11,007 and puts estimated at 4,221 lots. In London, robusta coffee futures finished weaker as funds and speculators sold the beans, but also pared those losses by the close on Thursday. The Liffe may contract lost $22 to settle at $1,528 a tonne, and set a range between $1,505 and $1,571. The weather in top grower Brazil's coffee growing region was projected to be mostly favourable for developing beans said weather forecaster DTN Meteorlogix.