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CSCE coffee dribbles lower in uneventful trading

NEW YORK: CSCE coffee futures slipped back slightly at the close on Friday, failing to follow through on the previous day's rally, although benchmark May managed to hold above the 105-cent level.

Active May lost 0.45 cent to finish at 105.40 cents a lb, trading from 106.50 to 104.30. Spot March closed at 104.85 cents, down 0.75.

July slipped back 0.35 cents to 107.80. The rest of the board fell by 0.10-0.25 cents.

Arabica futures opened lower, but local and speculative buying rapidly took prices up to test the day's highs, brokers said.

"The market has good industry support underneath and industry continues to buy scale down. They're basically taking whatever the market has to sell," one broker said.

He added however that volume was modest ahead of the weekend, especially as top coffee grower Brazil prepares for five days of Carnival festivities. "There's no interest right now."

Traders and brokers said that with Brazil absent from the market, transactions would be quiet during the whole of the next week and an absence of producer selling may allow prices to progress slightly.

"You might be a little firmer because Brazil is closed next week so you're not going to anticipate much hedge selling," a trader said. "But I think everything has kind of slowed down for now. I'm not very excited about it."

Brazil's coffee exporters said Friday they were anxiously awaiting news from government officials to know when they could register May shipments after an unexplained delay in the permitted period.

Some exporters said the delay in opening registrations could be somehow linked to to a planned retention scheme by which Brazil is expected to join with other top producers and remove supply from the market.

Talk has been circulating in the market place throughout the week about Brazil's intentions regarding any possible retention of coffee stocks.

"There are a lot of rumours. Whether that's going to mean anything, that's a different story, but yes, there's a lot of talk," one trader said.

Floor traders said that sporadic trade buying through the day allowed active May to hold above the 105 cent level, with some light pressure coming in from commission house sales.

On a technical basis, May arabica should see support at 100.25, then 100 cents, followed by 99 cents. Resistance would be at 106.30 cents, 107 cents, then 109-110 cents.

Volume traded reached an estimated 7,897 lots, against the official previous volume of 10,704 lots.

Call volume reached an estimated 1,269 lots, whilst puts were seen at 1,640 lots.

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