London coffee prices soared on Friday on speculative interest and currency moves which lured buyers into the market despite the recent recovery in prices, dealers said.
The outlook was for a volatile market within a range as prices consolidated this week's gains and with recent industry buyers pulling back as they waited for better opportunities.
"I think it is just spec buying coming into the market. The dollar is very week and the CRB index is through the roof and everybody wants to buy commodities," a trader said.
He was referring to the Reuters Commodity Research Bureau Index, a basket of 17 commodity prices that includes coffee among other soft commodities, energy and metals.
The dollar notched a fresh record low against the euro on Friday, making coffee prices more attractive in euro terms.
Benchmark March closed $18 higher, or 2.4 percent, at $767 a tonne on 6,905 lots out of total turnover of 10,201 lots.
It moved in a $775-745 range, after hitting a three-and-a-half-month continuation high at $783 on Tuesday.
Technical support was seen at $743 and then $733, with resistance at $775.
"We have Tet holidays right around the corner and this year these festivities are earlier and overlap with the peak of the harvest season," a dealer said, referring to the Vietnamese lunar new year.
"A significant amount of the pricing for this crop has already been done so there is room to the upside if funds decided to go long."
He added there would be five more days of intensive selling from the world's top robusta as festivities would draw sellers from the market from January 19.
Dealers said the market had already corrected most of its recent gains after the sharp rally earlier in the week and that the next leg up would be around $790, basis the benchmark.
Selling from Brazil was subdued given the strength of the real versus the dollar.
Spread trading contributed to volume, with the January/March spread trading around a $32 premium and the March/May switch also active, widening to around a $9 discount from $6 earlier in the week.
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