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CSCE coffee settles lower, eyes further losses

NEW YORK: CSCE coffee futures closed lower again on Tuesday as speculative selling kept arabicas at 16-week lows despite some earlier buying from roasters, traders and brokers said.

Active May ended at 104.35 cents a lb, down 1.85 cents and just above the session low of 104.30 cents. Its intraday high was 106.30 cents.

Spot March, which went into notice period Friday, closed at its low of 103 cents, down 1.30 cents having traded up to 104.75 cents. Back months fell 0.60-1.40 cents.

CSCE market was closed on Monday in observance of US Presidents Day.

Roaster buying shortly after the market opened took prices up to their highest intraday level, but speculative selling soon took the market back down to its lowest level since end-October 1999.

Arabicas gradually dribbled lower throughout the afternoon as speculators and locals continued to sell, dealers said.

"Basically you saw very good selling, mostly from locals and specs and there's still some March-May switching going on with the trade selling it - profit taking," one broker said.

LIFFE robusta market hit new lows on Tuesday, when March coffee dipped beneath the key $1,000 a tonne level to $996. This was robusta's weakest level since July 1993 on a front month continuation chart basis.

In fundamental news, customs workers at Brazil's key Santos port began a 24-hour strike early Tuesday over back pay and salary adjustments, port officials said.

So far, little disruption has been reported to loading or unloading of vessels, though a spokesman at port authority Codesp said the absence of customs officials would primarily affect imports.

Salomon Smith Barney softs analyst Walter Spilka said that continual increases in US certified coffee stocks appeared to put some pressure on prices.

"The buildup in stocks has been going on for the last 13 months and accelerated as the March delivery period approached," Spilka said a weekly Futures Research report, made available Tuesday to Reuters.

US certified stocks increased to 1,089,905 60-kg bags as of Feb 17 compared to 1,081,655 bags as of Feb 16.

Open interest in spot March decreased by 1,700 lots to 6,917 as of Feb 18, while it swelled to 29,670 lots, up 518 lots, in active May delivery.

Traders said support for May arabica stood at 104 cents, while resistance will likely be found at 110 cents, then 112 cents.

Volume was an estimated 10,687 lots against Friday's tally of 9,825 lots. Call volume reached an estimated 1,701 lots, with puts at 1,624 lots. -Reuters