NEW YORK (Dow Jones)--Coffee prices climbed Friday as tight physical suppliestriggered buying on bullish trend cues.
Nearby coffee for September delivery ended 4.30 cents, or 3%, higher at $1.66 a pound on ICE Futures U.S. The contract has risen 5.5% since July 21.
Coffee is trading in a production deficit as two seasons of poor harvests from Colombia and Central America have left allowed stocks of the high-quality coffee produced there to be depleted.
"We just don't have enough physical coffee to push the prices down," said Luis Rangel, vice president for commodities derivatives at ICAP Futures in Jersey City, N.J. September futures could rise to $1.70 next week, Rangel said.
Speculative traders, like banks and hedge funds, are attracted to the market as its potential to rise is reflected in technical charts. Futures held relative lows near $1.55 early in the week, signaling that demand was strong and prices were likely to rise. At the same time, there are few beans to sell to counter gains in the market.
"Coffee has a huge amount of speculator interest right now," says James Cordier, founder of OptionSellers.com in Tampa, Fla. "Open interest is just ballooning."
Cordier said coffee prices will rise toward $1.68 and $1.69 during August, though sales from Brazil are likely to block ascent beyond that point.
Brazil is the world's leading coffee producer. Coffee roasters have been substituting Brazilian coffee in recent years amid lack of the high-quality arabica beans produced in Central America and Colombia.
ICE coffee open interest--the number of active positions left at the end of the session--decreased by 279 lots Thursday to total 168,928 lots, according to exchange data.
Volume was estimated at 22,756 lots, according to exchange data. In options, approximately 9,432 calls and 3,411 put options traded on the floor.
ICE Change Range
Sep $1.6600 +4.30c $1.6045-$1.6760
Dec $1.6670 +4.40c $1.6115-$1.6805
Nearby coffee for September delivery ended 4.30 cents, or 3%, higher at $1.66 a pound on ICE Futures U.S. The contract has risen 5.5% since July 21.
Coffee is trading in a production deficit as two seasons of poor harvests from Colombia and Central America have left allowed stocks of the high-quality coffee produced there to be depleted.
"We just don't have enough physical coffee to push the prices down," said Luis Rangel, vice president for commodities derivatives at ICAP Futures in Jersey City, N.J. September futures could rise to $1.70 next week, Rangel said.
Speculative traders, like banks and hedge funds, are attracted to the market as its potential to rise is reflected in technical charts. Futures held relative lows near $1.55 early in the week, signaling that demand was strong and prices were likely to rise. At the same time, there are few beans to sell to counter gains in the market.
"Coffee has a huge amount of speculator interest right now," says James Cordier, founder of OptionSellers.com in Tampa, Fla. "Open interest is just ballooning."
Cordier said coffee prices will rise toward $1.68 and $1.69 during August, though sales from Brazil are likely to block ascent beyond that point.
Brazil is the world's leading coffee producer. Coffee roasters have been substituting Brazilian coffee in recent years amid lack of the high-quality arabica beans produced in Central America and Colombia.
ICE coffee open interest--the number of active positions left at the end of the session--decreased by 279 lots Thursday to total 168,928 lots, according to exchange data.
Volume was estimated at 22,756 lots, according to exchange data. In options, approximately 9,432 calls and 3,411 put options traded on the floor.
ICE Change Range
Sep $1.6600 +4.30c $1.6045-$1.6760
Dec $1.6670 +4.40c $1.6115-$1.6805
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