New York coffee ends at three-week high on fund buying

US coffee futures sprinted more than 2 percent to a three-week high on Wednesday, bolstered by speculative fund buying and a lack of strong producer selling from arabica-rich Brazil, traders said.
The most-active December arabica coffee contract jumped 2.10 cents or 2.7 percent to settle at 77.90 cents a pound on the New York Board of Trade, after trading from 76.30 to 78.90 cents.
It was the December delivery's loftiest settlement since October 7, when it closed at 78.15 cents.
"As the market traded above 78 cents, we started to see some selling out of Brazil," a trader said.
Among distant futures, March 2005 rose 2.05 cents to 80.90 cents and the rest climbed 2.05 to 2.10 cents.
Traders and analysts attributed the rally in part to firmness in top grower Brazil's cash differentials, which are priced either at a premium or discount against NYBOT's "C" futures contract, depending on the quality of bean.
"Differentials are holding firm even though there was a lot of rain in Brazil," said Judy Ganes of J Ganes Consulting. "The reality is that it (rainfall) didn't do much for the crop, except to help it from deteriorating further," she said.
Recent rainfall in Brazil has helped tree flowering for next year's crop and eased some concerns about a successful flowering.
Still, at least two industry reports over the past two months said Brazil's 2005/06 output will be reduced by factors ranging from abnormal weather in the year and increased pruning and stumping of older trees.
Weather service Meteorlogix predicted more rainfall in Brazil's coffee belt next week, following mostly dry conditions from tomorrow through on Sunday. "Right now Brazil is in the midst of rain in the north, but it is questionable as to whether we will see follow-up rain for an ideal flowering situation," a trader said.
NYBOT estimated volume for coffee futures reached 18,714 lots, compared with the previous count of 7,588 lots. Coffee call options fetched 6,448 lots while puts hit 3,280 lots.
NYBOT open interest in the coffee market rose 791 lots to 71,953 lots as of October 26.
Technically, traders put support for the December delivery at 75 cents and then at 74.50 cents, with resistance at 78.90 cents and then at 79 to 79.35 cents.