Short Covering Boosts Coffee Prices
December 18 2017 - 3:16PM
Dow Jones News
By Amrith Ramkumar
Coffee prices rose Monday, with some analysts attributing the
gains to investors covering their short positions.
Arabica coffee for March delivery climbed 1% to $1.219 a pound
on the ICE Futures U.S. exchange after ending a seven-session
losing streak last Wednesday.
Speculators have been dictating price movements recently, with
some traders closing out earlier bets that prices would fall, said
Joe Ricupero, vice president at R.J. O'Brien and Associates.
"The speculators were short and they're just covering their
short positions" before the end of the year, he said.
The latest data from the Commodity Futures Trading Commission
Friday for the week ended Dec. 12 showed a build up in short
positions by hedge funds and other speculative investors.
Also Friday, forecasts from the U.S. Department of Agriculture
showed a slight drop in coffee production expected in 2017-18 from
a year earlier and record consumption, though supply estimates
increased slightly from the agency's June forecasts.
The data came after Rabobank released a report Wednesday showing
a 6.5% year-over-year growth in net import growth in 17 non-coffee
producing countries, with strong net imports into Turkey, Russia,
Taiwan, South Korea, Australia and Argentina. The firm said it
expects arabica prices to end 2018 at $1.34 a pound. However, it
downgraded its projections for a supply-demand deficit in coffee in
2017/2018 due to an expected uptick in production and lower
demand.
Mr. Ricupero said he expects speculators to continue heavily
impacting price movements unless unanticipated weather disruptions
or data change the outlook for coffee.
In other markets, cocoa for March rose 2.4% to $1,922 a ton,
March raw sugar added 0.7% to 13.76 cents a pound, frozen
concentrated orange juice was down 2.4% at $1.41 a pound and March
cotton fell 0.9% to 75.20 cents a pound.
--Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
December 18, 2017 15:01 ET (20:01 GMT)
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