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Arabica Coffee Futures Close Modestly Higher, Spurred by Rally on Wall Street and Dollar Weakness

Strategic Insights

— 1 min read

Coffee futures closed modestly higher on Monday, driven by a rally on Wall Street, a weak U.S. dollar, and technical buying. The May coffee contract added 60 points to settle at $1.1075 a pound on ICE Futures U.S. Trading volumes were light, but market participants pointed to a higher Dow Jones Industrial Average, dollar weakness against the Brazilian real, and buying in major commodity indexes as key factors influencing the market. Coffee traders also cited concerns over tight supplies in Central America, South America, and Colombia as a fundamental driver of prices.

Key Takeaways:

  • Arabica coffee futures closed modestly higher on Monday, driven by a rally on Wall Street, a weak U.S. dollar, and technical buying.
  • The May coffee contract added 60 points to settle at $1.1075 a pound on ICE Futures U.S.
  • Trading volumes were light, with approximately 9,000 lots exchanged, according to exchange data.
  • Coffee traders pointed to a higher Dow Jones Industrial Average, dollar weakness against the Brazilian real, and buying in major commodity indexes as key factors influencing the market.
  • Concerns over tight supplies in Central America, South America, and Colombia were cited as a fundamental driver of prices, with Brazil's largest cooperative, Cooxupe, expecting to produce 2.7 million 60-kilogram bags of coffee in 2009-10, a 43% drop from the 2008-09 season.
  • The entire Brazilian crop is expected to total 36.9 million bags, down from 46 million last year, due mainly to the trees' production cycles.

Statistics:

  • May coffee contract settled at $1.1075 a pound, up 60 points.
  • Trading volumes were approximately 9,000 lots.
  • Related contracts:

+ Liffe May robusta coffee futures fell $19 at $1,530 a ton.

+ The nearby March contract lost $14 to end at $1,525.

  • Open interest:

+ ICE coffee open interest fell by 708 lots to total 133,548 lots.

  • Option trading:

+ Approximately 2,908 calls and 816 puts traded.

Sources:

  • Dow Jones Commodities News via Comtex.
  • Hernando de la Roche, Managing Director of Trading at Hencorp Coffee, as quoted in the article.
  • Brazilian cooperative Cooxupe, via local newspaper reports.

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