NY ANALYSTS SEE COFFEE FUTURES FALLING FURTHER
  New York coffee futures prices will
  probably fall to about 85 cents a lb in the next month before a
  consolidation trend sets in, according to market analysts.
      Yesterday, prices for the spot May contract fell below 1.00
  dlr a lb for the first time since August 1981 after the
  International Coffee Organization did not place new export
  quota discussions on its current agenda.
      Talks aimed at renegotiating ICO export quotas, after five
  years of price-supporting agreements, broke down in February.
      "Short-term, it looks like a definite test of 90 cents,
  perhaps 85 cents," said William O'Neill, coffee analyst with
  Elders Futures. "But the additional downside may not be all
  that great from current levels."
      "At this price level the market is very vulnerable to
  bullish developments," O'Neill added. "Rather than us having a
  market that will plummet we'll kind of see prices erode --
  probably to around 85 cents."
      "I definitely see 90 cents and would not rule out a brief
  drop to 85 cents," said Debra Tropp, a coffee analyst with
  Prudential Bache. But she said by June worries about a freeze
  in Brazil growing areas will become more of a market factor,
  with prices likely to consolidate ahead of that time.
      A trader at a major international trade house, who asked
  not to be named, said he expects a 10 cent drop near term but
  believes if Brazil opens May registrations at a relatively high
  export price and requires a high contribution quota from
  exporters the market could steady at the lower levels.
      Longer term, he added, producer pressure will mount on
  Brazil to agree to consumers' export quota terms, and a new
  international agreement could come into force next fall.
      Since the February talks broke down, the market has fallen
  from about 130.00 cents a lb to a low of 98.10 cents a lb
  today, as buyers and sellers sought to reassess supply and
  demand.
      Generally, analysts say, producers have a large buildup of
  stocks, but U.S. roasters have drawn down supplies and will
  need to do some buying soon.
      "Most producing nations have just completed or are about to
  complete their annual harvests and exportable supplies are at
  their seasonal peak. Exports remain behind year ago and
  warehouses in producer nations are becoming increasingly
  overburdened," said Sandra Kaul, coffee analyst for Shearson
  Lehman, in that firm's forthcoming quarterly coffee report.
      Kaul said producers' need to procure hard currency to
  service foreign debt will put further pressure on them to sell,
  and "this should keep substantial pressure on exporters to
  undertake sales despite the drop in prices to six year lows."
      Kaul believes the market will drop to 80 cents a lb before
  Brazil's frost season begins in June.
      Accurate assessments of roaster demand are hard to come by,
  though analysts note the peak winter consumption period is
  passed and demand usually slows this time of year.
      Shearson's Kaul estimated U.S. roaster ending stocks as of
  January 31, including soluble and roasted, at 6.3 mln bags
  compared with 6.9 mln at end-September 1986, a small drawdown
  for the usually busy winter roasting season.
      But Elders O'Neill said, "The roasters are not overstocked
  by any means."
      Analysts said picking a bottom to the market is difficult,
  given the fact prices have fallen into uncharted territory
  below the long-term support at 1.00 dlr per lb, and several
  traders said the sidelines might be preferable for the short
  term.
  

