20000315

CSCE coffee ends slightly off in thin volume

NEW YORK: CSCE coffee futures settled marginally weaker Monday in local dominated trading as market operators awaited Tuesday's meeting between the world's two biggest coffee producers, Brazil and Colombia.

"It was a lot of nothing today -- a short-term spec, local day," one trader said.

May arabicas KCK0 retreated 0.05 cent to close at 106.40 cents a lb after trading 107.30-105.25 cents. Spot March KCH0 came off 0.10 to 106 cents and July KCN0 fell 0.20 to 109 cents while the rest finished unchanged to 0.10 cent lower.

Coffee came under early pressure from local, origin and some speculative selling, but local buying came in to prop up prices at 105 cents a lb, floor dealers said.

"It held at 500 (105 cents, basis May) and there was support at 530 (105.30) and pretty decent support at 105.25," one floor trader said.

"It was a quiet market, the lightest volume we've had in a long time. It's been a local market, but I saw some origin selling overhead," another one said.

Traders said market participants were waiting to see the outcome of a meeting, scheduled for Tuesday, between Colombian veteran coffee leader Jorge Cardenas and Brazil's agriculture minister Marcus Vinicius de Moraes.

The two coffee giants will discuss a retention scheme to boost low world prices.

The Association of Coffee Producing Countries, a group of 14 nations representing the world's major coffee producers, will meet in London during the week of March 20 to discuss growers' plans.

Brazil is pushing for a retention plan to take some beans away from the market to shore up coffee prices.

"I would expect that they (ACPC members) won't vote in favour of any kind of retention because you won't get a unanimous vote," one New York-based trader said.

"I would say there's tremendous negativity to the whole concept, even internally. Even some of the producers are now against it. They've just figured out how much money it's going to cost them," the trader added.

Several traders have doubted the ability of coffee producing nations to participate in any type of stock retention scheme due to relatively high interest rates in their countries.

The latest CFTC Commitments of Traders report, released after the market close Friday, showed non-commercials, or large funds, holding on to their net long position, albeit reduced.

According to the report, funds were net long by 1,528 lots as of March 7, compared to 4,353 lots in the previous report.

Non-reportables, or small speculators however switched from a net short to net long position of 2,440 lots.

The combined net speculative position was barely changed at 3,968 lots, compared to 3,870 in the previous 2-week period.

On a technical basis, traders said May arabica should see support at 105, 102.50, then 100.25-100 cents, followed by 99 cents. Resistance would be at 110, then the recent peak of 110.25 cents.

Volume was an estimated 4,700 lots compared to Friday's tally of 6,916 lots.

Call volume reached an estimated 1,593 lots, whilst puts were seen at 789 lots.

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