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CSCE coffee ends slightly up on short covering

NEW YORK: Having spent most of Wednesday morning in negative ground attempting to get back over 102.50 cents (basis May), CSCE coffee futures received a late boost from short covering, traders and brokers said.

"The mood continues to be bearish. Everyone's looking for a place to buy it, so I think that's why the market stopped making new lows and you got people coming in doing a little short covering, going a little bit long," one broker with a major coffee house said.

May arabica rose 0.40 to close at 103.15 cents a lb, trading 103.50-101.25 cents. Spot March gained 0.45 to 103 cents.

July added on 0.10 to 105.85 cents whilst the rest rose by 0.25-0.55.

Fund selling and speculators weighed down on arabicas throughout most of the day, with many traders calling for benchmark May to fall back to, if not under, the psychological 100 cent level.

"It's mostly fund selling I'm hearing, long liquidation. Trade has been a good buyer scale down, but origin was pretty much out of it really," one broker said.

The broker said that expectations for another large increase in the Green Coffee Association's (GCA) monthly stock figure, aswell as a general lack of belief by market participants in producer countries' retention plans were also bearish factors.

GCA monthly warehouse stocks for February showed an increase of 365,000 60-kg bags to 3.501 million bags, mostly in line with market expectations.

In fundamental news, Brazil's government is considering a tiered system of trigger prices to hold back up to 20 percent of exportable supply from May as part of a global retention scheme, industry sources said on Wednesday.

Coffee producers will meet in London on April 4-5 to discuss plans for a global coffee retention scheme to underpin weakened world prices, a leading coffee body said on Wednesday.

Traders said that the market just shrugged off this latest retention news from Brazil. "I don't think people have confidence that any plan they put out now will be the ultimate plan," one of them said.

On a technical basis, traders said May arabica should see support at 102.50, then 101.25, followed by 100 cents. Resistance would be at 110, then the recent peak of 110.25 cents.

Volume traded reached an estimated 7,704 lots, against the official previous volume of 9,775 lots.

Call volume reached an estimated 1,318 lots, whilst puts were seen at 774 lots.

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