Coffee Futures Extend Gains on Spec Buying by FC Stone

Speculative buying for short covering propelled Arabica coffee prices at the New York terminal this
Friday.  The  most active contract  for March  delivery  gained 210  points,  settling  at  126.95  cents  per
pound. Without fundamental developments, market action was driven by technical factors. Trading
volume remained modest with 21,902 lots, including 3,172 switches. Short covering was evidenced by
another reduction in open interest. A drop of 1,384 lots in open interest put the working position at
170,304 open lots, the lowest levels since August. A sharp reduction in open interest in the beginning
of November, evidencing short covering, could have been the supporting factor in prices for the last 30
days. Open interest has fallen by 31,280 lots, while prices have recuperated by merely $0.0515 per
pound. During the week, Arabica coffee prices were influenced mainly by currency movements. The
dollar suffered a strong adjustment after the European Union announced a stimulus plan that did not
match  market  expectations.  Operating  volumes  were  characterized  by  low  levels.  On  other  news,
Volcafe published a reduction of their estimate for the 2015/2016 deficit to 5.1 million bags, from 6.4
million, but had no effect on price action. Prices ended the week with a gain of 310 points or 2.5%.