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CSCE coffee creeps higher in rangebound activities

NEW YORK: CSCE coffee futures ended marginally higher on Tuesday, trading within a tight range after an initial opening drop, in a quiet, lackluster session, traders and brokers said.

"It was a nondescript session with buying and selling within the range. Support is at 113.80 cents (March delivery), with resistance above 126 and a settlement above that being very bullish," said Scott Meyers, technical analyst with Pioneer Futures. "But there's no news and until those levels are breached I think it's going to be in this kind of mode."

Key March arabicas nosed 0.25 cent higher to 117.80 cents a lb after trading 118.25-115.50 cents. May gained 0.30 to 120.55 cents and the rest of the board put in a mixed performance, going from flat to 0.25 cent higher or 0.50 cent down.

Arabica futures opened sharply lower than expected due to some follow through local and speculative selling, but a small shortcovering rally allowed them to recover, brokers said.

"Everybody expects the funds to come in (and sell), but you've got to drive the market down to a level were they want to get out," one broker said.

Large speculative funds were shown holding a net long position of 10,196 lots as of Dec 28, according to the last CFTC Commitments of Traders report.

Prices rallied Monday in the wake of private forecaster Leon Yallouz's 2000/01 Brazilian crop estimate, but subsequently fell back as operators discounted his figures as too low.

"I think it's a little low. I think that most people have discounted it, but nobody wants to sell it down right now," the broker added.

The market spent the rest of an extremely quiet trading session fluctuating in a tight range as market operators now look for direction. "The market was very slow and quiet. I didn't see any stand-out buyers, but I saw spec (speculative selling," one floor trader said.

Brazil's coffee belt is predicted mostly dry this week, with rains petering out in the main growing areas until a new cold front enters the southeast next week, meteorologist Somar said.

Technicians said resistance in March arabica stood at 122-123 cents, then 126 cents. Support was pegged at 114-113.50 cents, then 109-110 cents.

Volume was an estimated 4,395 lots against the 9,185 lots previously. Call volume reached an estimated 4,686 lots, while puts were seen at 1,155 lots.

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