ICE arabica coffee futures were little changed in early trade on Wednesday, ahead of March options expiration at the end of the week, while spreading kept cocoa futures firm, dealers said.
"I think the origin selling should be getting done on a scale basis. Some have been holding back to see how high this thing can go. I'm looking for sideways (movement) from now until the option expiration on Friday," one coffee trader said.
On the electronic platform, the key March coffee contract was unchanged at $1.426 at 9:21 am EST (1421 GMT), in dealings from $1.407 to $1.429. The rest ranged from 0.05 cent higher to 0.30 cent lower. The spot month remained around the eight-year high hit Monday. With March options expiring on Friday, traders expected the key contract will stay near the $1.40 to $1.45 level.
Markets in top coffee producer Brazil were to reopen in the afternoon, after being shut Monday and Tuesday for the annual Carnival festivities. ICE March robusta futures were flat at 98 cents per lb, with no trading range, by 9:16 am.
Cocoa futures were firm in early dealings on heavy position rolling out of the March contract into the May and July contracts. "A lot of the focus is on the spreads," one cocoa trader said.
The electronic contracts rallied after the pit session closed Tuesday, with March hitting a fresh five-year high at $2,365 on fund buying, dealers said. The screen-traded ICE March cocoa contract was up $9 at $2,347 per tonne at 9:20 am, in a trading range from $2,330 to $2,353. The rest ranged from $1 to $7 stronger. "(March) is in a medium-term uptrend, within a channel.
In the short term however, the price overlaps and hesitant candlestick today point to a corrective decline," said Veronique Lashinski, analyst for Newedge USA in Chicago, in a report late Tuesday. Lashinski pegged strong support for the key contract at $2,235/$2,237 and then $2,200.