NEW YORK (Dow Jones)--Coffee prices rose Wednesday as roasters bought futures representing hard-to-find premium arabica beans.
Nearby coffee for July delivery ended 2.7 cents, or 0.7%, higher at $1.6420 a pound on ICE Futures U.S. The most actively traded September contract also settled 2.70 cent, or 1.7%, higher at $1.6585 a pound.
Coffee leapt to 12-year highs in mid-June as internal trading dynamics set off buying amid tight supplies of high-quality arabica beans. Futures have consolidated lower from a 25% rally in just three weeks.
"The breakout that we saw the last three weeks could be nothing more than a delayed reaction" to market fundamentals, said Luis Rangel, vice president of commodities derivatives at ICAP Futures in Jersey City, N.J.
For the six months preceding the rally, coffee prices were locked in a tight 10-cent range. Despite a dearth of available arabica beans, expectations for a bumper crop from Brazil capped prices. Traders have since realized that majority of Brazil's arabicas do not match the quality of beans from Central America and Colombia. Production there suffered in the last two years due to
unfavorable weather.
Despite sales Wednesday from speculative fund traders like banks and hedge funds, booking profits at the end of the quarter buying from commercial traders like roasters, bought propped-up prices, Rangel said.
September coffee futures have the potential to push past 12-year highs near $1.69 cents, said Jack Scoville, vice president at Price Futures Group in Chicago. The market is unlikely to move lower than $1.50 before new arabica beans begin to reach the market in late fall, when Central America and Colombia harvests coffee, Scoville said.
ICE coffee warehouse stocks decreased by 14,979 60-kilogram bags Wednesday to total 2.2 million bags, according to exchange data.
ICE coffee open interest--the number of active positions left at the end of the session--increased by 1,158 lots Tuesday to total 165,410 lots, according to exchange data.
Volume was estimated at 19,892 lots, according to exchange data. In options, approximately 2,712 calls and 3,301 put options traded on the floor.
Prices for lesser-quality robusta coffee beans, often used in blends, rose to 16-month highs Wednesday. September futures on Euronext NYSE Liffe settled up $30 at $1,731 a ton.
ICE Change Range Liffe Change
Jly $1.6420 +2.70c $1.6000-$1.6470 Jly $1,699 +$29
Sep $1.6585 +2.70c $1.6055-$1.6660 Sep $1,731 +$30
Nearby coffee for July delivery ended 2.7 cents, or 0.7%, higher at $1.6420 a pound on ICE Futures U.S. The most actively traded September contract also settled 2.70 cent, or 1.7%, higher at $1.6585 a pound.
Coffee leapt to 12-year highs in mid-June as internal trading dynamics set off buying amid tight supplies of high-quality arabica beans. Futures have consolidated lower from a 25% rally in just three weeks.
"The breakout that we saw the last three weeks could be nothing more than a delayed reaction" to market fundamentals, said Luis Rangel, vice president of commodities derivatives at ICAP Futures in Jersey City, N.J.
For the six months preceding the rally, coffee prices were locked in a tight 10-cent range. Despite a dearth of available arabica beans, expectations for a bumper crop from Brazil capped prices. Traders have since realized that majority of Brazil's arabicas do not match the quality of beans from Central America and Colombia. Production there suffered in the last two years due to
unfavorable weather.
Despite sales Wednesday from speculative fund traders like banks and hedge funds, booking profits at the end of the quarter buying from commercial traders like roasters, bought propped-up prices, Rangel said.
September coffee futures have the potential to push past 12-year highs near $1.69 cents, said Jack Scoville, vice president at Price Futures Group in Chicago. The market is unlikely to move lower than $1.50 before new arabica beans begin to reach the market in late fall, when Central America and Colombia harvests coffee, Scoville said.
ICE coffee warehouse stocks decreased by 14,979 60-kilogram bags Wednesday to total 2.2 million bags, according to exchange data.
ICE coffee open interest--the number of active positions left at the end of the session--increased by 1,158 lots Tuesday to total 165,410 lots, according to exchange data.
Volume was estimated at 19,892 lots, according to exchange data. In options, approximately 2,712 calls and 3,301 put options traded on the floor.
Prices for lesser-quality robusta coffee beans, often used in blends, rose to 16-month highs Wednesday. September futures on Euronext NYSE Liffe settled up $30 at $1,731 a ton.
ICE Change Range Liffe Change
Jly $1.6420 +2.70c $1.6000-$1.6470 Jly $1,699 +$29
Sep $1.6585 +2.70c $1.6055-$1.6660 Sep $1,731 +$30
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