Coffee futures set to slide on sell stops

Coffee futures set to slide on sell stops

LONDON (Reuter): LIFFE coffee futures pulled back after a firm start to end yesterday midsession sharply lower after trade houses stepped up selling and triggered light sell-stops on the way down.

Traders said the spot May came under further long liquidation while July noted light fund buying. But scale-down roaster interest at the lows helped cushion the fall.

Origin sellers notably from Indonesia were seen at the opening as the market gapped some $20-$30 higher at the start in line with the market expectations.

But the gains were shortlived and the market soon attracted trade sellers, taking May to a low of $1,585 after triggered light stop-loss selling at $1,600. On Thursday, the contract was also pressured by sell-stops at $1,610, traders said.

May finished the morning trade at $1,585 a ton, down $24, while July gave up $14 at $1,630 after matching Thursday's high of $1,669.

The selling in May widened May/July switches to $45 from Thursday's $40.

Volume reached a modest 3,136 lots.

Traders said the London setback would have little influence on the already buoyant New York arabica futures. Although New York was called to open 5.00 cents down on numbers, it could gap slightly higher or slightly down.

"I think New York is set for further gains," said one. Another said New York's July could test $2.00 level on the upside, after ending 4.80 cents to end Thursday at 198.20 cents a lb.

Traders said the New York market was being supported by continued nearby arabica supply tightness and the current truck drivers' strike in Colombia.

Broker GNI said a hailstorm swept through Brazil's Minas Gerais coffee belt on Wednesday but the damage was very isolated.