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CSCE coffee falls back, fails to break range

NEW YORK: CSCE coffee futures ended marginally softer on Monday, remaining within the current trading range, when strong resistance in spot March put a cap on prices, traders and brokers said.

March arabica finished 1.20 cents off at 111.70 cents a lb, trading 114.25-111.25 cents. May fell 1.15 to end the day at 114.55 cents. The rest lost between 0.35 and 1.20 cents.

An early bounce from fund buying ran into strong resistance above 114 cents (March basis), when speculative and managed fund selling knocked prices back down, traders said.

"We opened up higher then ran into trouble. There was a sell-off at that point. Funds were a good seller and trade," one floor dealer said.

Trade and industry buying subsequently came in to support at the dips, traders said.

Prudential Securities softs analyst Arthur Stevenson said in his weekly futures outlook report that coffee prices still looked set to rise in the near-term.

Supporting factors include a possible reduction of the 1999/2000 crop estimate by Colombian coffee officials and continuing ideas that Brazil's 2000/01 crop may fall below recent trader exportations, Stevenson said.

"We would abandon our near-term constructive price view if March failed to hold above the 109.50 cent level."

In fundamental news, Brazil's top exporter Unicafe pegged the 2000/01 crop at 31.00 million 60-kg bags of coffee. Unicafe's first estimate for the upcoming crop was higher than the government's preliminary figure of 28.90 million bags, issued by the Agriculture Ministry in December.

In other news, coffee exports from Guatemala's 1999/2000 crop year through Jan 31 reached 1,162,266 60-kg bags, a rise of 8.23 percent compared to the same point in the previous harvest, the private growers association Anacafe said on Monday.

Technicians said support for March arabica remained around 109.50 cents, while resistance will likely be found at 116 cents, then 118-120 cents.

Volume traded reached an estimated 9,975 lots, against the previous official volume of 6,754 lots. Call volume reached an estimated 3,280 lots, whilst puts were seen at 1,398 lots.

The nine-day relative strength index (RSI) of March coffee stood at 37 on Monday, compared to 49 at the close on Friday.

Technicians normally believe an RSI reading of 30 or less is an indication that the market is oversold, while 70 or more is usually a sign it is overbought on a short-term basis.-Reuters