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CSCE coffee tumbles on spec,local and fund selling

NEW YORK: CSCE coffee futures closed five percent lower on Friday after local and speculative selling triggered stops, attracting late fund selling, traders and brokers said.

Key March arabica settled at 112.55 cents a lb, down 6.00 cents, its lowest close since Nov. 24, 1999, trading 120.25-112.55 cents. May shed 5.95 cents to close at 115.35 cents a lb, whilst back months fell by between 6.10-6.35 cents.

The CSCE will be closed on Monday in observance of Martin Luther King Jr's birthday and will reopen for trading on Tuesday, Jan. 18.

Arabica futures spent the morning trading sideways, being pushed back and forth by local and small speculators, but started to fall sharply when stops were triggered under 115.50 cents (March basis) brokers said.

"It's locals and specs getting stops into the market under 115.50, but there's not much volume," a Miami-based broker said.

Technical selling later pushed key March arabicas down to their lowest level since late November 1999, filling a gap and attracting fund liquidation as the market broke down further, traders said.

"When it got below 113.80 cents (March), we saw some funds kicking in, but we had good European roaster buying into it," one New York trader said.

Brokers added that Friday's March option expiry also added to the downswing.

"We've probably lost one or two thousand contracts today. But I think there is good commercial support at the 113-112 level and that really needs to hold," James Cordier of Florida-based Liberty Trading Group said.

London's robusta market fell to new contract lows, closing at its lowest level since February 1994, when fund selling triggered stops. Active March lost $44 to $1,120.

With very little fundamental news circulating, traders said participants are waiting to see Friday's release of the Commitments of Traders report and next week's U.S. warehouse stocks for December.

The Green Coffee Association (GCA) will release data on Tuesday, after Monday's market holiday in observance of Martin Luther King's birthday.

"We're looking at an increase and that could fuel the fire on the downside, that with producer selling from other countries, that has really dampened enthusiasm," Cordier said.

Several traders said that talk was circulating in the market regarding a USDA estimate for Brazil's 2000/01 crop.

"I think that generated some spec selling as they anticipate bearish figures. They're (USDA) not going to give a more bullish figure than Yallouz," one trader said.

But USDA sources in both Washington and Brazil, contacted on Friday by Reuters, denied that a report would be published in January, stating that the next Tropical Products report was due out in June.

Technicians said that resistance for key March contract was around 120 cents, then 126 cents. Support was pegged at 113-112 cents, then 109-110 cents.

"If we trade below (113 cents) next week, this bull market's over. It's at a critical support level right now," Cordier added.

Volume traded reached an estimated 12,658 lots against the 5,631 lots previously. Call volume reached an estimated 3,439 lots, whilst puts were seen at 2,457 lots. -Reuters