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CSCE coffee edges higher in rangebound activities

NEW YORK: CSCE coffee futures settled marginally firmer Tuesday, but were trapped in a narrow trading range ahead of front-month March's first notice day, traders and analysts said.

Spot March arabica closed 0.80 cent higher at 105.80 cents a lb after trading 106.70-105.30 cents. Active May ended up 0.90 cent at 108.65 cents and the rest rose 0.95 cent.

Arabicas saw lackluster morning trading in switch-dominated activity, with buying by the ring taking prices in active May to their intraday high, brokers said.

But prices dribbled lower during the afternoon as speculators rolled out of March delivery and into May, with origin still above the market and industry and roasters below, traders said.

"The market's pretty firm, just awaiting this afternoon's green coffee number. There was good switch buying early in the morning and then it came off at the end," a Miami-based broker said.

Open interest in spot March fell another 2,191 lots to 13,770 as of Feb 14 while it increased by 2,199 to 24,106 lots in active May delivery.

Market operators are waiting for the publication of Green Coffee Association's monthly stock data.

Traders and brokers contacted by Reuters have called for an increase in warehouse stocks of 300,000-500,000 60-kg bags, although most believe this rise has already been factored into prices.

Brokers noted that total open interest had declined over the past couple of days, indicating that funds had continued to erode their net long position in the market.

"Now I think they're pretty much out of the market now. They're either out or getting short," one broker said.

The latest CFTC Commitments of Traders report showed non-commercials, or large speculators, holding a net long position of 5,633 lots as of Feb 8.

But this does not take into account last Wednesday's sell-off, as well as Monday's speculative liquidation.

"They are probably net short by now," Mike MacDougall, vice-president of the Brazil desk at Fimat Futures New York said.

In fundamental news, coffee exports from five Central American countries in January reached 1.387 million 60-kg bags, up 11 percent from the same month in 1999, Guatemala's National Coffee Association said Tuesday.

Anacafe said in a report that coffee exports from Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica from October to January reached 3.12 million 60-kg bags, up 13.7 percent from the same period in the previous coffee harvest.

Arabica futures have been under pressure from Central American and especially Mexican coffee exports in recent weeks, which have caused U.S. certified stocks to swell on a daily basis.

Traders said support for May arabica stood at 107 cents, then 104 cents, while resistance will likely be found at 110 cents, then 112 cents.

Volume was an estimated 14,127 lots, against the previous official volume of 15,478 lots. Call volume reached an estimated 1,276 lots, whilst puts were seen at 831 lots.-Reuters