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CSCE coffee edges up, bounces back over 110 cents

NEW YORK: CSCE coffee futures closed marginally higher Tuesday when early speculative selling dried up and prices held above the psychological 110-cent level, traders and brokers said.

March arabicas finished up 0.55 cent at 111.65 cents a lb after trading 112.75-109.80 cents. May gained 0.60 to 114.50 cents and the rest rose 0.60-0.75 cents.

Before the market opened, traders had anticipated a sharp decline under 110 cents, which generated some early speculative selling. But this was offset by roaster buying.

"There was good volume traded between the low of 109.80 and 0.70 (110.70 cents) with good switch volume as well," a floor source said.

Brokers said that when the selling dried up, speculative and local buying and shortcovering allowed prices to work higher, with some industry buying noted underneath.

In fundamental news, Brazil should export up to a maximum 1.2 million 60-kg bags of green coffee in January, down sharply from the amount shipped in January 1999, the Council of Green Coffee Exporters of Brazil (Cecafe) said Tuesday.

Jorge Esteve Jorge, Cecafe's president, said the poor export performance expected for January could be repeated in February as exporters had made their January and February sales at around the same time.

Technicians said support for March arabica was around 110-109 cents with resistance likely at 116 cents, then 118-120 cents.

Volume was an estimated 8,786 lots, against the previous official volume of 9,553 lots. Call volume reached an estimated 2,468 lots, whilst puts were seen at 1,924 lots.

The nine-day relative strength index (RSI) of March coffee stood at 36 at the close on Tuesday, against 32 previously.

Technicians normally believe an RSI reading of 30 or less is an indication that the market is oversold, while 70 or more is usually a sign it is overbought on a short-term basis.

The CSCE is a subsidiary of the New York Board of Trade.-Reuters