Global coffee output will be 120.6 million bags in 2009-10, compared with 128.1 million bags a year earlier, the London- based International Coffee Organization said in an e-mailed statement today. Production in Vietnam, the biggest producer of robusta beans used in instant coffee and blends, "seems to have fallen" in the crop year 2009-10, according to the ICO.

"The outlook for Vietnam is not as great as we were hoping it to be" because of the lack of availability of credit to farmers, Eldred Buck, managing director of Eiger Trading Advisors Ltd. in London, said in a phone interview. "Yields are a bit low," he said.

Eoin Treacy's view Arabica coffee prices broke their progression of rising reaction lows in September 2008 and fell to 110¢, around which they ranged until May 2009. Since then they have traded somewhat higher but in a relatively inconsistent manner. Arabica has been holding a tight range between 130¢ and 140¢ since February and is currently rallying towards the upper side. It would appear to be only a matter of time before it sustains an upward break.

Robusta, traded on LIFFE, has until relatively recently been a poor performer when compared to Arabica. However, it broke the medium-term progression of lower rally highs in March (Also see Comment of the Day on March 29th), ranged below $1400 and broke upwards once more today. A sustained move back below the $1300 would now be required to question scope for further higher to lateral ranging.

Elsewhere in the soft commodity sector, LIFFE cocoa had become overextended relative to the 200-day MA and encountered at least short-term resistance near £2600. A pullback towards the mean is now more likely while a sustained move to new recovery highs is required to reassert the medium-term uptrend.

Liffe sugar is testing the upper side of the two-month base and a downward dynamic would be required indicate anything other than temporary resistance in this area.