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  • Feb 18th, 2005
  • Comments Off on New York coffee backs off five-year high
Benchmark arabica coffee futures retreated from recent five-year highs and a new contract peak on Wednesday after short-term speculators banked profits, traders and brokers said. "There was some buying this, and in the end we saw some profit-taking," said Hernando de la Roach, senior vice president of Hencoop Coffee Group. "I think the market is anticipating that the industry buying is not going to be as present as it was in the last couple of weeks," he said.

The New York Board of Trade's most-active May arabica contract fell 1.10 cents to settle at $1.1950 a lb, after dealing from $1.190 to a new contract high $1.2150. On a continuation basis, the top trade was the highest for a second-month contract since January 13, 2000.

Front-month March, which has its first notice day for delivery on Thursday, shed 0.95 cent to end at $1.1685 after hitting a new contract peak at $1.190.

"I think once you start getting close to $1.20 in the March, you start getting close to a lot of people's targets," said Jack Scoville, vice president of The Price Group, a commodities brokerage.

"At least I didn't see the big fund buying like we've seen the other days," he said, pointing out that buying was mainly from speculative investors. "That seems to be an indication that maybe we are getting near the top."

Back month arabicas fell 1.10 to 2.20 cents. A rise in exports from nine-washed arabica producers helped to check price gains, although the overall outlook for the year is far from rosy, traders said.

January exports from Colombia, Mexico, Central America, Peru and Dominican Republic rose 7.3 percent from a year to 2.27 million 60-kg bags, Guatemalan grower group Anacafe said on Wednesday.

Arabica futures have risen over 50 percent in the past four months, climbing their way out of a crisis that featured years of low prices and oversupply. Growing managed-money fund interest coupled with market expectations of a supply deficit of arabica this year have bolstered prices.

In London, Life's benchmark may contract finished at $863 a tonne, up $4 on the day.

Estimated trading volume in NYBOT coffee futures reached 33,305 lots, down from the official 42,949 contracts the previous session.

On the charts, traders put technical support in the May arabica between $1.170 and $1.1750, with resistance at $1.2150 and then at $1.250.

Copyright Reuters, 2005


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