US coffee futures rose more than 4.0 percent to a three-month high on Tuesday, buoyed by fund buying, bullish technical signals and lingering worries about supply tightness, market sources said.
The New York Board of Trade's active arabica contract for December delivery settled up 4.90 cents at $1.0785 a lb., the loftiest level for the contract since August 12, when it ended at $1.0955.
Earlier in the session, the contract peaked at $1.08.
"We saw some spec buying, and we hit some fund buying when we got above $1.05," said Boyd Cruel, senior softs analyst at Alaron Trading.
Stop-loss buy orders were elected once the contract broke above $1.0670, a double top set earlier in the month, he said.
Among other arabica futures, March likewise climbed 4.90 cents to end at $1.1165 a lb. and more distant deliveries gained 4.80 to 5.45 cents.
Front-month arabicas have risen 12.5 percent from last week's bottom trade of 96 cents a lb., fuelled mainly by reports of crop losses and delays in new coffee harvests in Central America and southern Mexico following recent hurricanes.
Traders and analysts expect crop damage in the Americas to total between 1 and 2 percent of an estimated 108 million 60-kg bags of 2005/06 world coffee output. Meanwhile, producers in top coffee grower Brazil have been reluctant to sell because of a currency disadvantage between the value of the dollar and the real.
Brazil's real has rallied more than 20 percent since the start of the year, despite numerous
interventions by Brazil's central bank to bolster foreign reserves and, indirectly, weaken the Brazilian currency.
"There is very little selling coming out of Brazil. We saw some today, but not anything notable," a trader said, pegging psychological resistance in NYBOT's December arabica at $1.10.
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