Arabica coffee futures vaulted over 5 percent Friday to prices not seen in more than 4-1/2 years on speculative and fund buying amid little producer selling, traders and analysts said. The New York Board of Trade's most-active March arabica contract settled at 110.50 cents a lb, up 5.20 cents or 4.9 percent after dealing from 104.30 cents to 111.75 cents which is the loftiest level for a front month since July 2000.
Investor stop-loss buying kicked in after the March contract broke through a series of resistance levels, including its previous contract peak 108.70 cents scaled on December 21.
"We had a technical breakout here with fund and spec buying and a lack of producer selling," said Boyd Cruel, senior softs analyst at Alaron Trading.
"Next week is going to be a holiday in Brazil. Volume might be lighter but based on the strong techs here, we could see some follow-through on the upside," he said. "But this coffee market has a tendency to give back its gains when it's a little overdone, and I believe it is overdone."
Brazil, the world's biggest coffee grower and exporter, celebrates the Carnival holiday next Monday and Tuesday.
Coffee futures have risen about 50 percent since last August, fuelled by market expectations of a supply deficit for the high-quality arabica crop in the 2005/06 season.
A stronger Brazilian economy is also allowing producers more staying power before rushing to the market to hedge, said James Cordier, president of Liberty Trading Group, a commodities brokerage.
The recent run-up in futures prompted several major US roasters to jack-up retail prices late last year, including big brand names like Chock Full o'Nuts, Folgers and Maxwell House. Among other NYBOT contracts, May gained 5.20 cents to 112.90 cents and deferred deliveries rose 5.05 to 5.15 cents. Estimated trading volume reached 25,873 lots from Thursday's official count of 15,871 lots. Open interest rose 175 lots to 105,721 contracts as of February 3.
Meanwhile, spot-month March robusta futures in London settled $22 or 2.67 percent higher at $846 a tonne.
Technical traders pegged support for March arabica between 106.80 and 107 cents, with resistance at 115 and then 119 cents.
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