DJ ICE Coffee Review: Ends Lower Amid Firm US Dollar, Fund Sales

NEW YORK (Dow Jones)–Speculative fund selling pressured ICE Futures U.S. arabica coffee Friday as the U.S. dollar rose while traders took profits ahead of the weekend.

December coffee settled down 225 points at $1.3565 a pound for the session, up 5.95 cents on the week. The March contract settled 230 points lower Friday at $1.3835 a pound.

Coffee pushed higher in early dealings on light follow-through buying as the market consolidated the week’s gains. The December contract touched $1.3895, just shy of Thursday’s $1.39 high, and eased back on fund selling as the U.S. greenback firmed.

“The higher dollar and the upcoming weekend is an excuse to take profits,” said James Cordier, founder of Liberty Trading in Tampa.

Speculators, dealing in futures rather than the underlying commodity, tend to sell U.S. dollar-denominated commodities when the greenback is firmer and they are more costly in other currencies. Futures eased through the remainder of the session and settled near lows.

“The market’s taking a little breather after the rally we saw last week,” said Boyd Cruel, senior softs analyst at Vision Financial Markets in Chicago.

Cruel noted buying on early pullbacks as the markets’ technical picture builds. Coffee has been trading on speculative fund interest as the cash market is quiet. Cash coffee trade is slow in Central America, Mexico and Peru as fresh supply is not expected until late November and roasters are reluctant to buy stocks for the winter season.

ICE coffee warehouse stocks decreased by 2,180 145-pound bags Friday to total 3.12 million bags, exchange data shows.

Liffe November robusta coffee futures settled down $20 at $1,461 a ton, and the January contract also settled $20 lower, at $1,485.

ICE coffee open interest decreased by 1,394 lots Friday to total 101,476 lots, according to exchange data.

  Volume was estimated at 12,276 lots, according to exchange data. In options,
approximately 4,091 calls and 3,187 put options traded.

       ICE       Change     Range
Dec   $1.3565   -225 pts  $1.3520-$1.3895
Mar   $1.3835   -230 pts  $1.3800-$1.4160

  -By Holly Henschen, Dow Jones Newswires; 212-416-2138;
holly.henschen@dowjones.com

  (END) Dow Jones Newswires

  10-09-09 1445ET

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