US coffee futures rose on Wednesday for the second consecutive session amid lingering worries about supply tightness and damage to coffee storage and roasting facilities in hurricane-stricken Louisiana.
Roasters in the region scrambled to ensure the safety of their workers and assess damage to their plants in the wake of Hurricane Quatrain, while futures market participants squared positions for the end of the month, market sources said.
"You would think supply concerns and warehouse concerns in New Orleans would be the impetus to get this market to rally 5 cents or 7 cents," said James Corridor, president of Liberty Trading Group, a Florida-based commodity brokerage.
"A lot of these markets are controlled by the funds right now," he said, adding that the funds have been recent sellers and the roasters were buyers on a "hand-to-mouth" basis.
The New York Board of Trade's washed-arabica contract for December delivery rose 3.05 cents, or 3.1 percent, to settle at $1.0105 cents a lb., after initially surging to a one-week high $1.03 a lb. at the start of trading.
March arabica advanced 2.95 cents to $1.0440 cents a lb., and back month contracts advanced 1.20 to 2.95 cents. Despite on Wednesday's top trade in the December contract, the market remained about 30 percent lower from the benchmark contract's peak of $1.4490 on March 10.
Meanwhile, big roasters like Procter & Gamble Co and Sara Lee were still gathering information about their employees and facilities in and around New Orleans. "Our first concern is that our employees and their families are safe and out of harm's way," said Dawn Mann Charles, a spokeswoman for Sara Lee.
Sara Lee has a roasting facility and distribution centre near New Orleans, catering for a mix of foodservice coffee brands representing about 10 percent of the company's total coffee production.
Based on a preliminary assessment, they're appeared to be no significant damage to the company's Harridan facility and St. Rose distribution centre, Mann Charles added. Procter & Gamble Co, the maker of popular brands like Folgers and Millstone, has its largest coffee storage and production facility in New Orleans. The company closed its plants ahead of Hurricane Quatrain's arrival to the Gulf Coast on Monday.
P&G produces more than 50 percent of Folgers coffee in its New Orleans facility, a company spokesman told Reuters on Tuesday.
He said it was still to adequately assess any damage to its coffee storage and production facilities. In a research report, Jason Gere, an equity research analyst at A.G. Edwards & Sons, wrote that in the worst-case scenario the company could lose $100 million of sales in the first-quarter 2006, assuming P&G plants remain closed for several weeks.
By the end of July, the Port of New Orleans had about 1.6 million 60-kg bags of green coffee in warehouses, or about 27 percent of green coffee stocks warehoused in the country. Estimated NYBOT arabica futures trading volume reached 12,619 contracts shortly before the market closed, up from the 10,454 contracts officially tallied the previous session.
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