Benchmark March arabica coffee futures surged on Monday to a high dating back to February on fund buying that triggered buy stops, traders said. "Fund buying broke some stops and we broke $1.2890 (per lb.), which was the previous high. With no selling, it's easy to make the coffee go high," one trader said.
The New York Board of Trade benchmark March coffee contract shot up 2.80 cents to $1.2865 per lb., after trading in a band from $1.2440 to $1.2925. May rose 2.85 cents to $1.3160 and traded between $1.2760 and $1.32. The rest finished up 2.85 to 3.05 cents per lb.
Floor traders estimated the final trading volume at 14,999 contracts, up from the 8,624 contracts officially tallied the previous session. "The euro strength has been helping the coffee market for some time. The real (Brazil's currency) is getting stronger as well, and is putting the Brazilian farmers a little away from the market," a trader said.
Brazil is the world's largest coffee producer. Traders expected follow-through buying on Tuesday to push prices higher. "It seems like it's set to go higher and break $1.3000 (per lb). I think the trend should still go higher, until mid-January," one trader said.
In London, Life's March robusta contract closed up $15 per tonne at $1,481 on strength from speculative buying with scale-up origin selling helping to limit gains, dealers said. Meanwhile, United States weather forecaster Meteorlogix said widespread rains will drop 0.3 to 1.5 inches of precipitation, with near to below normal temperatures, in Brazil through on Saturday. Temperatures were expected to return to near or above normal on Sunday.
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