US arabica coffee futures finished lower in quiet trade on Wednesday, as investors locked in profits before the Thanksgiving holiday weekend after on Tuesday's solid gains.
"It's the day after first notice day, and the day before the long weekend. Generally, you get a little bounce after the first notice day but it settles back down," said one coffee analyst in Florida. Tuesday was the first notice day for December contracts, and futures ended up 1.5 percent on strong buying by speculators and day traders.
The market will be shut onThursday and Friday in observance of Thanksgiving. Trading resumes on Monday. In open-outcry trade, ICE March arabica settled down 1.15 cents at $1.266 per lb. The rest dropped 0.90 to 1.25 cents. On the electronic platform, March was down 1.05 cents at $1.2670 at 2:27 pm EST (1927 GMT), dealing from $1.2610 to $1.2805.
"Coffee is quiet, there isn't any news out here at all. It's pre-Thanksgiving blues," another coffee trader said. Near-term direction of the arabica market could depend on factors outside of the coffee and the commodity sectors due to robust interest by investment funds, the analyst said.
"A lot of what goes on in the coffee market is tied to other commodities and equities with the funds being so active. If they are losing money elsewhere, they can either choose to step in here to offset the losses, or they can choose to sell coffee to get some cash flow," he said.
ICE estimated final open-outcry volume at modest 4,268 lots, compared to 1,604 lots of Tuesday, when 11,123 contracts traded on the screen. Open interest fell by 2,611 lots to 153,591 contracts as of November 20, exchange data showed.
Meanwhile, Nestle's CEO Peter Brabeck said on Wednesday the company is well prepared to digest increases in agricultural prices and an economic slowdown and has not been affected at all by the subprime crisis. Rising commodity prices will weigh more heavily on Nestle's own cost structure in the first half of 2008 than it has in 2007, Brabeck said.
But he did not foresee further price increases in farm goods like cocoa, sugar and milk in 2008 as seen in 2007. In London, robusta coffee futures finished mostly steady although the spot month's premium widened back to $500, a level it held at for much of last week, up from around $460 at the close on Tuesday.
The benchmark January position ended $2 higher at $1,826 a tonne while November finished up $37 at $2,321. The ICE March robusta contract was quoted at 83 cents per lb, trading from 82.50 to 83.00 cents, by 2:18 pm ICE Futures electronic trade ends at 3:15 pm.