A flurry of speculative fund buying pushed New York arabica coffee futures more than 6 percent higher on Monday, with the most-active contract marking a new high as it neared $1 a pound, traders said. New York Board of Trade's most-active March arabica contract rose 5.90 cents, or 6.4 percent, to settle at 97.85 cents a lb, smashing its recent high of 96 cents on November 15.
The contract peaked at 98.25 cents before falling back.
"It was mostly spec buying," said a trader, referring to small managed-money funds returning to the market after a long holiday weekend. Other coffee contracts rose 5.55 to 5.85 cents.
Since the start of the month, the March delivery has risen more than 20 percent thanks to fund interest.
With coffee prices hovering at levels not seen since July 2000, traders and analysts question when speculative funds will start to reverse their long positions or when producers will begin to sell or hedge.
"Hedging hasn't taken place yet. We expect it to at these prices and we still think it will," said James Corridor of Liberty Trading Group.
CFTC, which releases its Commitments of Traders report later on Monday, showed a net speculative long position in New York Board of Trade's "C" coffee contract at 20,130 lots on November 16.
One trader said that figure could rise to as much as 25,000 lots, which is about 3,000 lots shy of the record net long position by non-commercial investors.
NYBOT coffee volume on Monday reached 18,785 contracts, well above the 7,979 lots traded last on Wednesday.
Open interest rose by 502 lots to 88,926 lots as of November 24.
NYBOT's coffee market was closed on Thursday and Friday for the US Thanksgiving holiday.
Traders said the next psychological resistance level for the March contract is $1, with support at 96 cents and then at 95 cents.