20000129

CSCE coffee drifts lower, still rangebound

NEW YORK: CSCE coffee futures closed marginally lower Thursday when an attempt to break through support at 116 cents a lb failed, although good scale buying held the market up, traders said.

"We're trapped between 120 and 110 cents (March basis)," one broker with a roaster said. "They're talking about stops underneath the market, but at the same time you're seeing scale down buying from roasters."

Key March arabicas settled down 0.55 cent at 114.60 cents after trading 116.40-112.80 cents. May slipped 0.70 to 117.30 cents and the rest shed 0.75 cent.

"The fact of the matter is that the market does hold, but it can't sustain rallies," the broker said.

Fund buying took arabicas to their intraday high, but ran into strong resistance, prompting a speculative sell off, one floor trader said.

"It was speculative and fund-type stuff that brought us up to the highs and a soon as they were done the market drifted back down and they tried to break it down. That didn't work either so it just drifted right back to mid-range," one broker said.

The CFTC said this week's snowstorm would not affect the releas of data and it would issue the bi-weekly Commitments of Traders report as usual on Friday.

Most traders believed that it would portray large investment funds holding on to their net long position, as attempts to push the market under a key support level of 110 cents had failed.

"If the funds don't liquidate and roll, then it's not going to break down. But if for whatever crazy reason they start to sell -- two or three thousand lots -- then we're down to 102 cents," one broker said.

Floor traders said that market talk concerning reports that Colombia's Jorge Cardenas, the veteran chief of the powerful National Coffee Federation would lower the 1999/2000 crop estimate, had a short-lived bullish effect on prices.

"But I'm starting to hear some things about the Colombia situation and that more people are getting concerned about it," one buyer said.

The Federation has already forecast a 1999/00 harvest of no higher than 9.3 million (60-kg) bags, the worst performance in two decades.

European physical traders said that high prices were paid by Brazilian exporters this week as supplies of 1999/2000 coffee were tight due to worries over next season's drought-damaged crop.

Traders said Brazilian beans were increasingly difficult to obtain for February shipment but March and April were less a problem.

Technicians said resistance for key March is around 118-120 cents, with support at 110-109.50 cents.

Volume was an estimated 8,392 lots against Wednesday's official volume of 8,081 lots. Call volume reached an estimated 2,438 lots, whilst puts were seen at 1,945 lots.

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