Arabica coffee futures on ICE settled quietly lower on Wednesday in light dealings and range-bound movement, pressured by the strong dollar while position rolling boosted volume, traders said."London was down a lot so we just traded down in sympathy. I think people are unsure where it's going," one coffee dealer said, about arabica futures that appear to be seeking direction.
The benchmark ICE July contract settled down 0.35 cent at $1.3635 per lb after dealing from $1.344 to $1.373. The market trades until 3:15 pm EDT (1915). By 2:43 pm, July delivery was down 0.65 cent at $1.3605. Two deferred contracts aside, the rest were down 0.05 to 0.60 cent. The dollar did have an impact of knocking coffee down," another trader said.
The US currency rallied after hitting a record low against the euro on Tuesday. The stronger dollar makes commodities like coffee, which is traded in the greenback, more expensive for holders of other currencies.
This combined with profit taking during dealings and pressured many commodity markets. The Reuters-Jefferies CRB Index, which tracks prices of 19 commodity futures including coffee, fell off on Tuesday's record high. Roasters continued to buy market dips, traders said. "I think they're going to wait now and look for the $1.32 area," one dealer said, basis July. May/July and July/September switches accounted for nearly half of the session's volume by 2:30 pm, they said.
On Tuesday, first notice day for May dropped 9,006 lots to 8,131 lots. Open interest for July inched up 82 contracts to 92,995 and September rose 1,247 to 25,234, exchange data showed. The first delivery date for the May contract is May 1. On the London International Financial Futures Exchange (Liffe), robusta coffee dropped on fund and investor selling after the dollar climbed and oil prices fell.