(Comtex Business Via Thomson Dialog NewsEdge)NEW YORK, Mar 13, 2006 (Dow Jones Commodities News via Comtex) –Arabica coffee futures slid Monday on the New York Board of Trade, but active roaster and industry buying pared a fund-driven selloff to 2 1/2-month lows.

 

Most-active May closed 170 points lower at $1.0590 a pound.

“Funds and locals sold and May broke the recent low at $1.0650,” a desk manager here said. “But there was excellent buying from U.S. and European roasters and industry. Locals covered and some of speculators bought. We settled 150 points off the low.”

The desk manager attended the National Coffee Asociation meeting in Florida on Friday and Saturday and said “the Brazilians there said the new (Brazil) crop could be 45 to 46 million bags, which is pretty much what I’d been hearing.”

He said the futures market isn’t oversold but will continue to uncover good roaster buying if prices erode further.

Futures volume was estimated at 10,200 lots, and in the options ring, 3,505 calls and 5,077 puts traded.

Brazil from March 1-10 exported 501,913 60-kilogram bags versus 327,196 bags in the same February period, the Brazilian Green Coffee Exporters Council, or Cecafe said Monday.

Michael Nugent, UBS commodity analyst in California, said at the NCA meeting that world coffee demand is expanding as new consumers in Asia and elsewhere discover java. China and India, accounting for 40% of the world population and more than a fourth of global gross domestic product annually, are supplementing traditional tea drinking with a developing taste for coffee.

“It won’t happen tomorrow,” but if China’s population consumed only one kilogram of coffee per person annually, the nation would need 33 million bags yearly, the size of the Brazilian crop in an “off,” or low-output year, in that country’s production cycle, Nugent said.

Coffee traders and analysts can’t rely solely on traditional tools, like supply-demand balances and carryover stocks as a percent of consumption, now that the market is increasingly influenced by hedge-fund participation and the trend toward globalization, Nugent said Friday. Today’s hedge funds trade commodities, stocks, bonds and other markets, with $650 billion to $1 trillion under their control, shifting huge investments as they search for profits, he said.

International Coffee Organization head Nestor Osorio said Friday that Brazil will hold only 9 million 60-kilogram bags in late March, the lowest since 1957.

U.S. coffee importers and roasters remain constrained by imbalances in the shipping industry and still-high freight and fuel costs, transportation experts said Saturday at the NCA meeting. World demand for shipping containers will grow nearly 11% this year, after rising an average 8.7% annually over the last 20 years, said Michael Horn of Maersk Inc., the New Jersey subsidiary of shipping giant A.P. Moller-Maersk (MAERSK-B.KO).

The outflow of all exports from Asia, mainly China, exceeds the exit of goods from Western countries and continues to cause dislocations in vessels, with boats clustered in the Far East when they may be required by coffee exporters in Central and South America, he said.

“It remains difficult for coffee importers to have vessels in place when and where they’re needed,” Horn said.

Nybot May finds support at $1.0440, $1.0425 and $1.0400 and faces resistance at $1.0710, $1.0725, $1.0750 and $1.0800.

Nybot Change Range (cents) Liffe Change (dlrs)
Mar 104.40 dn 1.30 102.80-105.00 Mar 1100 dn 41
May 105.90 dn 1.70 104.40-107.10 May 1117 dn 40
-By Susan Buchanan, Dow Jones Newswires; 201-938-5950; susan.buchanan@dowjones.com
(END) Dow Jones Newswires

03-13-06 1459ET