DJ ICE Coffee Review: Rises On Buying At Lows Amid Scarce Supply

NEW YORK (Dow Jones)–Short-covering and new buying nudged ICE Futures U.S.
coffee modestly higher Friday as available arabica supplies dwindle.

  March coffee settled up 90 points, or 0.6%, at $1.3960 a pound. The May
contract settled 95 points higher at $1.4140.

  Coffee prices dipped in early trading, though buying came in at lows from
short-covering as traders bought back pre-sold futures, said Rodrigo Costa,
vice president of institutional sales and Newedge USA in New York. Short
positions are bets that prices will fall.

  New buying also came in at lows amid the bullish physical supply situation,
Costa said.

  “Supplies for quality coffee are tight,” he said.

  He noted rising premiums in Colombia, which is traditionally the No. 3 world
coffee producer, but which has suffered shortfalls in the last two crop years.
World coffee supplies are expected to fall short of consumption in the ongoing
crop year on weaker crops in Colombia and Central America.

  “Exchange stocks are down, which is supportive–probably one of the reasons
it’s holding in range,” said Tom Mikulski, senior market strategist at
Lind-Waldock in Chicago.

  ICE coffee warehouse stocks decreased by 8,725 60-kilogram bags Friday to
total 2.969 million bags, according to exchange data. Analysts said exchange
stocks below 3 million bags represent a scarce-supply situation.

  Coffee is range-bound at $1.37-$1.41 basis March, Mikulski said. A move lower
would put support at $1.32, though a push above the range would set resistance
at $1.46,

  Liffe March robusta coffee settled $33 higher at $1,360 a ton.

  ICE coffee open interest decreased by 2,726 lots Thursday to total 128,399
lots, according to exchange data.

  Volume was estimated at 18,087 lots, according to exchange data. In options,
approximately 3,023 calls and 2,220 put options traded.

       ICE       Change     Range
Mar   $1.3960   +90 pts  $1.3730-$1.4125
May   $1.4140   +95 pts  $1.3910-$1.4300

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

  (END) Dow Jones Newswires

  01-22-10 1519ET

  Copyright (c) 2010 Dow Jones & Company, Inc.

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