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CSCE coffee rallies as sentiment improves

NEW YORK: CSCE coffee futures rallied Wednesday, rising for the third straight session on roaster, trade and light fund buying, although prices did not stray far from their recent trading range.

"It was a good rally up off the lows -- a strong, very steady market with feel to it. The market's got a good tone underneath it with buying around," one broker with a trading house said.

Key March settled up 2.30 cents at 115.15 cents a lb after trading 115.30-111.90 cents. May gained 2.25 to 118 cents and the rest rose 1.60-2.25 cents.

Arabicas once again saw support from roasters, with early speculative buying adding to the upswing and a lack of aggressive orgin selling allowing prices to spike higher, traders said.

"Roaster buying in March and spec (speculative) buying in May pushed market up. We took some stops out over the 3.70 (113.70 cent). There's light origin selling at the top," one floor trader said.

"You didn't have aggressive selling from the funds today so the market was able to make a little bit of headway and you actually had some light fund buying at the end of the session," one trading house said.

James Cordier of Florida-based Liberty Trading Group said that a slowdown in the recent onslaught of Mexican coffee into the market had contributed to the pop higher.

"I think you've seen the end of this Mexican selling which was capping the market over the last week or so, and even though they have more coffee yet to sell, I think a lot of people are feeling like the bulk of that has been completed."

Traders and brokers said today's close above 115 cents bode well for prices in the short-term.

"I think that made a difference and gave the market a bit of a bounce and might confirm the lows even. It looks better and the market feels like it has the low in place," one trader said.

"Now that the Mexican selling has slowed, I'm looking for slightly higher prices over the next couple of sessions," Cordier added.

Growers in the Brazilian coffee region of Cerrado, famous for its quality arabicas, said they may harvest 500,000 60-kg bas less than officially forecast as the government was unable to consider last month's adverse weather.

Coffee production in Cerrado was pegged at 2.5 million bags by the Agriculture Ministry in its first estimate of Brazil's 2000/01 crop in December.

The Cerrado produced 3.0 million bags of coffee in 1999/2000, according to the government's final estimate.

Technicians said that resistance for key March contract was around 118-120 cents. Support was pegged at 110-109.50 cents.

Volume was an estimated 7,904 lots against Tuesday's official tally of 6,298 lots. Call volume reached an estimated 2,588 lots, whilst puts were seen at 1,387 lots.

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