Arabica coffee futures settled sharply higher Tuesday on the back of a weaker dollar and speculative buying amid thin volume, traders said. "The weak dollar, speculators buy a bit (and) look for a breakout. It's light volume, easy for a big swing," one coffee dealer said.
The benchmark ICE May arabica coffee contract settled up 3.9 cents or 2.5 percent at $1.5785 per lb. The market trades until 3:15 pm EDT (1915). By 2:02 pm, the May contract was 3.55 cents higher at $1.575, in dealings from $1.545 to $1.5865.
Two-sided trade participation and fund selling was also noted. The dollar fell against a basket of currencies. This made coffee, which is traded in the greenback, cheaper for investors who hold other currencies.
"Coffee will probably continue to run higher. (Origin) sellers have sold a bunch of coffee the last 90 days and priced it. I expect it will work its way back up to recent highs," another coffee dealer said. The key May arabica contract hit a 10-year high at $1.719 per lb in late February. April options will expire Friday.
Robusta futures trading on the London International Financial Futures Exchange (Liffe) also moved sharply higher on the weak dollar. The May contract surged to close up $106 or 4 percent at $2,758 a tonne. ICE's May robusta futures were up 5.65 cents at the session high $1.2465 per lb, by 2:00 pm, with the session low at $1.216. A total volume of 16,365 arabica futures contracts traded on ICE Wednesday. Open interest fell 1,205 lots to 186,695 lots as of March 12.
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