Speculators continue to drive volatile trade

NEW YORK, Aug 04, 2010 (Dow Jones Commodities News via Comtex) — Coffee prices rose Wednesday from recent losses as speculators continued to drive volatile trade. Nearby coffee for September delivery 3.10 cent, or 2%, higher at $1.6975 a pound on ICE Futures U.S. Coffee prices have rallied 23% since June. Both fundamental and technical factors are driving the market, but fund interest seems to be the main catalyst in recent choppy trade. World supplies of high-quality arabica coffee beans are tight after two years of poor harvests in Colombia and Central America. Though a bumper crop is flowing in from Brazil, there is indecision in the market as to whether those beans will be of sufficient quality to meet market demand. Available premium arabica supplies are tight, particularly ahead of the late fall harvest in the main origins of that coffee. In the meantime, fund traders are pushing prices. “Funds are looking for something to happen,” said Sterling Smith, market analyst at Country Hedging in St. Paul, Minn. “Perhaps a major setback in production.” September coffee is establishing a new range from $1.60 to $1.80, Smith said. “Prices can stay in this box for a very, very long time,” he said. ICE coffee open interest–the number of active positions left at the end of the session–decreased by 2,794 lots Tuesday to total 166,182 lots, according to exchange data. Volume was estimated at 21,436 lots, according to exchange data. In options, approximately 8,980 calls and 1,983 put options traded. ICE Change Range Sep $1.6975 +3.10 pts $1.6760-$1.7170 Dec $1.7085 +3.20 pts $1.6850-$1.7270