NEW YORK (Dow Jones)--Coffee prices soared to fresh 12-year highs Friday, driven by speculative fund buying.
Nearby coffee for September delivery ended 3.25 cents, or 2%, higher at $1.7630 a pound on ICE Futures U.S., it's strongest settlement since February 1998.
Coffee prices have risen 6.5% this week. This is the latest leg of a 17% rally that took off in mid-June. Two years of poor weather have hampered production of high-quality arabica beans in Colombia and Central America, the leading sources of that premium coffee. Those beans won't be available until late fall, when harvests begin there.
In the meantime, supplies from Brazil, the world's top coffee producer, have helped fill the gap, but now producers there are holding onto supplies on hopes that prices will climb. Brazilian green coffee exports rose to 1.64 million bags in July, up from 1.47 million in June, according to the Brazilian Green Coffee Exporters Council, or Cecafe. Coffee trade in Brazil saw a lift from the New York rally but activity remained light in the last week, as much of the early crop has been sold and as producers await higher prices, traders there said.
Coffee and most commodity prices got a boost Friday as the weaker dollar sustained speculative interest in commodities. Contracts are less costly in other currencies when the greenback is down. Lower-than-expected U.S. economic growth sparked dollar weakness during the session.
"The market jumped because of very good buying from funds and specs," said Hernando de la Roche, managing director of coffee trading at Hencorp Becstone Futures in Miami.
Coffee futures trading has been volatile in recent weeks as fund traders look to technical charts and macroeconomic cues for direction, as well as coffee's bullish fundamental picture.
Prices are likely to trade within a range of $1.57 to $1.77 in the near term, said Sterling Smith, market analyst with Country Hedging in St. Paul, Minn.
Prices for robusta coffee on NYSE Liffe hit a two-year high Friday. Liffe September coffee settled $63, or 4%, higher at $1,810 a metric ton. Fund buying on top of declining stocks supported that market similarly, analysts there said.
ICE coffee open interest--the number of active positions left at the end of the session--increased by 2,492 lots Thursday to total 169,979 lots, according to exchange data.
Volume was estimated at 28,236 lots, according to exchange data. In options, approximately 10,009 calls and 7,643 put options traded on the floor.
ICE Change Range
Sep $1.7630 +3.25c $1.7265-$1.7875
Dec $1.7680 +3.05c $1.7320-$1.7935
Nearby coffee for September delivery ended 3.25 cents, or 2%, higher at $1.7630 a pound on ICE Futures U.S., it's strongest settlement since February 1998.
Coffee prices have risen 6.5% this week. This is the latest leg of a 17% rally that took off in mid-June. Two years of poor weather have hampered production of high-quality arabica beans in Colombia and Central America, the leading sources of that premium coffee. Those beans won't be available until late fall, when harvests begin there.
In the meantime, supplies from Brazil, the world's top coffee producer, have helped fill the gap, but now producers there are holding onto supplies on hopes that prices will climb. Brazilian green coffee exports rose to 1.64 million bags in July, up from 1.47 million in June, according to the Brazilian Green Coffee Exporters Council, or Cecafe. Coffee trade in Brazil saw a lift from the New York rally but activity remained light in the last week, as much of the early crop has been sold and as producers await higher prices, traders there said.
Coffee and most commodity prices got a boost Friday as the weaker dollar sustained speculative interest in commodities. Contracts are less costly in other currencies when the greenback is down. Lower-than-expected U.S. economic growth sparked dollar weakness during the session.
"The market jumped because of very good buying from funds and specs," said Hernando de la Roche, managing director of coffee trading at Hencorp Becstone Futures in Miami.
Coffee futures trading has been volatile in recent weeks as fund traders look to technical charts and macroeconomic cues for direction, as well as coffee's bullish fundamental picture.
Prices are likely to trade within a range of $1.57 to $1.77 in the near term, said Sterling Smith, market analyst with Country Hedging in St. Paul, Minn.
Prices for robusta coffee on NYSE Liffe hit a two-year high Friday. Liffe September coffee settled $63, or 4%, higher at $1,810 a metric ton. Fund buying on top of declining stocks supported that market similarly, analysts there said.
ICE coffee open interest--the number of active positions left at the end of the session--increased by 2,492 lots Thursday to total 169,979 lots, according to exchange data.
Volume was estimated at 28,236 lots, according to exchange data. In options, approximately 10,009 calls and 7,643 put options traded on the floor.
ICE Change Range
Sep $1.7630 +3.25c $1.7265-$1.7875
Dec $1.7680 +3.05c $1.7320-$1.7935
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