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" Coffee prices seesaw in short-term trade, sugar drops
Thursday, 03 April 2014 02:12 Posted by Abdul Ahad E-mailPrintPDFViews:238
imageNEW YORK/LONDON: Arabica coffee futures on ICE were lower on Wednesday, in a heavily-traded session that spanned a wide 10-cent range as day traders tested chart-based levels on both sides of unchanged.
Raw sugar on ICE Futures U.S. and white sugar on Liffe fell for the third straight day on technical selling. Cocoa also dropped, in line with the weak 19-commodity Thomson Reuters/CoreCommodity CRB Index.
May arabica coffee futures on ICE ended down 2.55 cents, or 1.5 percent, at $1.7270 per lb after hitting $1.6790, the weakest level in more than one week that briefly took it below the 61.8 percent Fibonacci retracement level at $1.7025. The contract dealt as high as $1.7830.
The market rose an astonishing 80 percent to a two-year high at $2.0755 per lb by March 11 on concerns that a drought would curb production in top grower Brazil. It has since fallen around 15 percent as rains brought some relief to farmers and the market awaited more accurate harvest estimates.
The spot contract still stands about 56 percent up so far this year.
"More people are hunting for some stops and trying to figure out what to do but it's impossible to have a grasp on this," said Rodrigo Costa, director of coffee for Newedge USA.
"Stops" are automatic buy or sell orders previously placed in the market that are triggered at specific levels.
"I think it's mostly short-term guys who are probably provoking most of the volatility," Costa said.
The contract has formed a head and shoulders pattern, indicating it could extend losses if it closes below $1.70, Costa said.
Edward Bell, a senior commodities analyst at the Economist Intelligence Unit (EIU), said he may revisit his forecasts when the harvest gets under way but for now he is keeping his average price for the year at about $1.70.
"We've heard the weather has improved and they have had some of the rain they need but, until we get clear view on how extensive the drought damage has been, we would hold fire (before revising price and production forecasts)," Bell said.
Robusta coffee futures on Liffe fell with July finishing down $8, or 0.4 percent, at $2,013 a tonne."
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