Arabica coffee futures trading on ICE on Wednesday slipped on the speculative liquidation that pushed most commodities into negative territory in a correction to Tuesday's rally, dealers said. "The market came off today with more-or-less spec liquidation, as there was a decent amount of spec liquidation in most commodities," one trader said.
"There was some light roaster interest. I think we're going to have some more corrective action." The key ICE March arabica coffee contract trading in the open-outcry pit closed down 1.95 cents at $1.349 per lb.
The rest retreated from 1.30 to 2.05 cents. On the electronic screen, March arabica was 1.75 cents lower at $1.351 cents at 1:56 pm EST (1856 GMT), moving from $1.334 to $1.369. "It looks like somebody who initially put on short (positions), they were a good seller in the $1.37 to $1.39 area.
They seem to be buying back $1.35 today," one dealer said, pointing out this prevented deeper losses in the March contract. "You're going to see support every 50 points on the way down most likely as this one entity gets out of some of the shorts that they have," the dealer added. The March contract nearly reached an eight-year high on Tuesday before closing weaker on late-day profit taking. On Tuesday appeared to be the final day of index fund re-balancing, which gave most commodities a significant boost recently.
Meanwhile, Procter & Gamble Co is expected to announce it will spin off its Folgers coffee business, the Wall Street Journal reported on its Web site on Wednesday. On the London International Financial Futures Exchange (Liffe), robusta futures ended mildly lower. The Liffe March contract finished down $4 at $1,997 a tonne, spanning $1,987 to $2,008. The ICE March robusta contract had not traded by 1:58 pm.
ICE pegged final open-outcry volume at 3,603 lots, compared with the 3,193 lots traded on the floor on Tuesday, when 23,505 lots traded on the screen. Open interest rose 1,535 lots at 180,100 lots as of January 15.