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Coffee grinds in rumor mill
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July 29, 1998: 5:32 p.m. ET
A fund buyer may loom while Brazil said to cap supply; corn won't pop up
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NEW YORK (CNNfn) - Coffee prices percolated higher Wednesday on speculation a major buyer could step in to buy stocks and Brazil may hold back delivery of strong crop yields this year.
The coffee futures contract for delivery in September, the most active month of trading, closed up 2.85 cents to 118.40 cents a pound in CSCE trading Wednesday.
Anne Predergast, a soft commodities analyst at Refco, said rumors have been rife that an unidentified fund has been buying or plans to buy certified stocks in CSCE warehouses.
That could push up prices into the $1.20 range -- or even as high as $1.30 a pound, she said, "if there is a real squeeze."
Meanwhile, prices have gotten support as traders believe Brazil may be trying to keep a lid on supplies.
"Brazil is going to keep within the market quota," Prendergast said. "Somebody is giving sweet deals to growers to keep their supply off the market."
She said many analysts believe Brazil's crop may yield between 34 million and 38 million bags, up from 22 million bags last year.
"That's a huge coffee crop. If all of it were sold, it would really devastate the market," she said.
Corn won't pop higher
A bumper corn crop in the Midwest and looming threats of new taxes in Europe drove corn prices lower for the fourth straight time Wednesday.
The corn futures contract for delivery in September, the nearest-expiring month, fell one cent lower to $2.20 per bushel in CBOT trading. The most-active December contract lost 1/2 cent to $2.26 a bushel.
Traders said the bearish influences included favorable weather, which is expected to yield a strong crop, and consideration by European Union officials of a punitive duty on 2.7 million metric tons of U.S. corn gluten feed.
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