Coffee futures rose more than 4 percent to an 11-week peak on Monday on the threat of a trucker strike in Colombia coupled with fears of Hurricane Ivan harming supplies stored in New Orleans, traders and analysts said.
"That is one piece of news in the market," said Jim Corridor of Liberty Trading Group, referring to the trucker strike in No 3 grower Colombia. "Mainly, we are trading the storm track for the hurricane."
On the New York Board of Trade, the most-active December coffee contract settled at 77.35 cents a lb, up 3.15 cents, or 4.25 percent, after trading from 73.75 cents to 77.60 cents. That is the highest close since 78.03 cents on July 1.
Spot September also gained 3.15 cents to 73.55 cents, while longer-dated contracts also rose 3.15 cents. Speculators bought on reports that the ferocious storm Ivan was expected to cross the western edge of Cuba on Monday and enter the Gulf of Mexico on Tuesday, having veered west from its previous forecast path toward Florida, traders said.
"Most of this stuff was technical and spec-oriented buying, but there is definitely some origin interest on the sell side," one trader said. Still, Corridor said traders were buying "insurance" against the prospect of Ivan destroying coffee stocked in New Orleans.
As of September 9, there were 942,924 bags of certified coffee warehoused in the city, which are several feet below sea level. Prices advanced even further after the 120,000-member Colombian Truck Drivers' Association said it would go on strike on Tuesday to protest fuel price rises and trade talks.
A truck strike could hit exports of coffee from the world's third-largest producing nation, after Vietnam and Brazil. Corridor said top grower Brazil had an enormous amount of coffee for sale between 75 cents and 80 cents, so that for every tick up there was some resistance from origin selling.
Elsewhere, Mexico's coffee exports in August fell 25 percent versus the same month a year ago and exports for the 2003/2004 harvest so far were down 5 percent, the government's coffee council said.
On the weather front, the seven-day weather outlook for Latin America's main coffee regions was "generally favourable" for crop development, weather service Meteorlogix said in a statement.
NYBOT estimated volume was 19,810 lots, compared with the previous count of 9,477 lots. Call volume reached 6,002 lots and puts hit 3,966 lots. Open interest in the coffee market rose 183 lots to 80,808 lots as of September 10.
Technically, one trader said, support for the December delivery lies at 76 cents, with resistance at 77.60.