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CSCE coffee ends lower, pressured by spec selling

NEW YORK: CSCE coffee futures came under pressure from speculators to fall at the close Thursday, when heavy resistance overhead once again blocked attempts to take the market above the 118-120 cent area, traders and brokers said.

"We're still in a range. It was looking weak and now it is weak. We have hit 118 three times and when it doesn't go through people look the other way," one roaster said.

Key March KCH0 arabicas ended down 4.70 cents at 112 cents a lb after trading 118.80-111.70 cents. May KCK0 shed the same to close at 114.90 cents and back months all lost 4.65 cents.

Futures again saw a stronger than predicted opening, but when key March contract failed to break out above 118 cents, speculative, origin selling and profit taking sent prices back down south, brokers said.

"The market couldn't hold at the highs when it was trying to break out of 118-120 and there was a lot of resistance up there. Profit taking, spec selling and the market traded all the way down to 113," one floor trader said.

Although March dipped briefly below the psychological level of 112 cents, brokers said that there was still good support underneath. "But there's nothing new out there and we're heading to the gap underneath the market," a broker said

But one roaster said he wasn't convinced that industry would continue to step in and support. "Roasters are pretty complacent...they don't care. Central America's full flush. Mexico's full flush," he added.

Traders and brokers said that small funds and large speculators sold the market, with origin continuing to fix above. "It was locals and specs, a lot of longs getting out of their positions," one Miami-based broker said.

"The funds, for whatever reason, aren't letting go (to their net long position). We're basically bouncing back and forth in a range with no real news to break it out one way or another," the roaster said.

"So we just sit back and wait and see what's going to happen and right now there's not a lot happening."

Thursday, German analyst F.O. Licht issued a preliminary estimate of world coffee production/consumption balance.

Licht forecast a small surplus of one million 60-kg bags for 1999/2000, with production estimated at 104.5 million bags and consumption at 103.2 million bags.

Due to continued uncertainty about the amplitude of damage to Brazil's 2000/01 coffee crop, Licht said that the coffee market will be even more nervous than usual from the start of the next Brazilian frost season.

"We anticipate considerable price volatility, fuelled by rumour and speculation, and, unfortunately, a greater degree of misinformation."

Technicians peg resistance for key March at around 118-120 cents, with psychological support at 112 cents, then 109-110 cents.

US certified coffee stocks rose to 945,247 60-kg bags as of Jan 19, compared to 941,997 as of Jan 18.

Volume was an estimated 11,678 lots on Thursday, against Wednesday's official volume of 9,073 lots previously. Call volume reached an estimated 2,739 lots, whilst puts were seen at 2,961 lots.

The CSCE is a subsidiary of the New York Board of Trade.-Reuters