CSCE coffee futures rallied late on Thursday to reach a new high close in its nine-week rally, driven by additional fund buying and reduced producer selling, brokers said.
"The funds are hungry and producers are holding back," said one broker, referring to the appetite of the commodity funds to add to their gross and net long positions.
Active March arabica closed up 1.35 cents at 75.30 cents per lb, off the top of a 72.80 to 75.50 cent range.
Global bean prices have risen since late November on growing tightness due to reduced exports by producers like Brazil and Colombia, along with ideas that the coming 2004/05 coffee crop from top grower Brazil could be lower than originally thought.
Traders said the latest figures from the International Coffee Organisation (ICO) helped the tone of the market.
World coffee supply should fall short of demand in 2003/04 by around 10 million 60-kg bags, the first deficit in six years, the ICO said on Thursday in its latest monthly report.
The ICO said the fall in 2003/04 production was mainly due to a cut in Brazilian output. May coffee rose 1.40 cents to 76.90 cents and the back months settled 0.70-cent to 1.30 cents higher.
"The funds are really in charge. A 100 point lower doesn't phase them any more. This market action is bullish," said James Cordier, president of Liberty Trading Group.
On Tuesday, March tested price levels not seen since May 7, 2003, when the contract hit 76 cents. On a weekly spot continuation chart, futures hit prices not seen since the beginning of November 2000.
Funds are estimated to have bought an additional 3,000 to 4,000 contracts on Thursday, according to floor brokers. Estimated volume slowed to 19,115 contracts on Thursday compared with 29,273 on Wednesday.
Open interest jumped 3,590 contracts to record 96,888 contracts on Tuesday, breaking the prior record of 93,318.
In other news Roberto Giesemann, president of the Mexican Coffee Council (CMC), told Reuters that production for the harvest, which runs from October 1-September 30, would likely come in at 4.5 million bags, in keeping with estimates.
CSCE is a subsidiary of the New York Board of Trade.