FC Stone Coffe commentary for January 7th

ICE Coffee Futures Close Higher on Fund Buying  

Arabica coffee futures closed higher Monday helped by spec
  buying due to the adding of  positions by index funds.  The most ative contract
  for March delivery advanced 305 points to settle at 150.40 cents a pound. 
  According with some analysts, index funds could buy around 11,000 lots of
  Arabica coffee under the re-balancing of the GSCI and the DJ-UBS index funds.  
  A strong real in Brazil, and holiday in Colombia contributed to limit producers
  selling.  In other news,  reports from Central America evidenced concerns with
(  leaf rust)  Roya infestation due to highest temperatures and moisture.  
Anacafe  from Guatemala reduced exportable output to 3.1 million bags from 3.5
estimated  last month.   The disease is now present in 70 % of the trees,
Anacafe added.    The IHCAFE ( Honduras) estimated at 5%-10% the level of the
infestation,  and  kept the export forecast unchanged at 5.6 million bags. In
Costa Rica, the  ICAFE, estimated a  reduction of 10% for the 2012-13 crop due
to the Roya.  


  
In London,  the March structure
generated a  good proportion of the turnover into the session with the March /
May trading  into $4 and March/July trading at -12 which put down a good part of
the morning  business. Origin showed scale selling in the March as the board
moved into the  1960 zone but tended to back away whilst most of the outright
buying appeared to  be linked with the arbitrage players as traders responded to
the New York  strength which followed the pattern of last week. January exposure
was 530 lots  lower after business on Friday to leave a working balance of 2,900
lots swinging  into today’s session. For the moment the important fact is the
spot month open  position is falling each day. No Grading recorded today which
is the market’s  main issue. No tenders today either which means the cumulative
total for January  so far is 2,306 originals and 122 re-tenders.  The next
upside trigger will be  1980 which should generate enough of a spring action to
take the board towards  the 2000 when prices will over extend and roll over. The
market must take  advantage of low stocks and no grading if we are to
rally.  


ICE Coffee Warehouse Stocks were down 936 to 2,585,946
bags.  Pending Grading: 61,509  bags.