Arabica coffee ended at a five-year high on Tuesday as managed-money funds showed no signs of retreating from a market that has seen prices rise over 50 percent in four months. At the New York Board of Trade, most-active May arabica settled up 5.2 cents or 4.51 percent at $1.2060 a lb after dealing from $1.1480 to a new contract high of $1.2090. On a continuation basis, it was the highest closing price for a second-month contract since January 13, 2000, when it ended at $1.2130, according to data from the Commodity Research Bureau.
"I think a lot of people were looking for a pullback in the market, but it hasn't happened yet," said Judy Ganes of J. Ganes Consulting, a commodities advisory firm.
"Roasters seem to have more covering to do than people thought," she said, adding, "It just goes to show that there is not that much coffee at origin." Among other arabica futures, front-month March closed up 5.4 cents or 4.8 percent at $1.1780 after setting a new contract high of $1.1825.
Back month futures gained 5.2 cents across the board. Arabica futures have been hovering at 4-1/2-year highs since November, when managed-money funds started to flock to the market, which had seen years of oversupply and rock bottom prices.
The fundamental picture looks different this year. Arabica output from Brazil, the world's leading producer and exporter, is officially forecast to fall sharply to between 21.5 million and 23.5 million 60-kg bags from 31.1 million bags in the 2004/05 season.
The fall in Brazil's production was largely attributed to a downturn in the country's biennial crop cycle. Arabica production from other Latin American countries likewise is sluggish this season.
"The fundamentals haven't changed much," said Boyd Cruel, a senior soft analyst at Alaron Trading. "This is more of a technical move." Leading retail coffee brands like Chock full o'Nuts, Folgers and Maxwell House hiked their retail prices back in December.
The bullish tone is arabica futures helped robusta futures in London. Liffe benchmark May rose $14 to settle at $859 a tonne. Last week the contract peaked at $827 to mark the highest since February 12, 2003.
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