Arabica futures prices sprang to a fresh five-year high on Monday, with growing fund and speculative appetites for commodities helping to push the coffee market further away from a recent crisis. A lack of producer hedging or selling fuelled the bullish momentum, traders and analysts said. "It's been a fund-driven rally here in the last month to a month and half, and they just continue to buy. So it's not necessarily the fundamentals it's more technical," said Boyd Cruel, senior softs analyst at Alaron Trading.
At the New York Board of Trade, the benchmark washed arabica contract for May delivery rose 6.15 cents, or about 5 percent, to settle at $1.3020 a lb., after dealing from $1.25 to a new contract and five-year high $1.3060.
On a continuation basis, it was the loftiest settlement for a May contract since December 20, 1999, when it closed at $1.3805. Despite a rise in top grower Brazil's coffee exports in February, market players were preoccupied by the technical indicators as the May contract shattered its previous contract high of $1.2660, reached on February 24.
"It was more of a technical break," said a trader. "It was a very classical performance of consolidation last week in an up market followed by confirmation. If it hadn't confirmed this by breaking out, it would've been a very different looking market than what it is right now," he said.
Brazil exported 1.51 million 60-kg bags of green coffee in February, up 8.1 percent from the 1.40 million bags shipped a year ago, data from the Council of green Coffee Exporters of Brazil (Cecafe) showed.
Arabica prices have risen more than 60 percent since October amid a combination of industry expectations of flagging global supply, steady to increasing consumption and growing interest from funds and speculators.
The recent trend is a big shift away from the past four out of five years with historically low prices, which forced thousands of farmers in developing countries out of work. Investors have turned to coffee and other commodities markets for fresh risks and rewards compared with only modest gains in US stocks and bonds. A weak US currency has attracted foreign investors to dollar-denominated assets. Among other arabicas, July delivery also rose 6.15 cents to $1.3260 a lb., while deferred deliveries rose 0.95 to 1.15 cent.
Estimated NYBOT coffee futures trading volume reached 14,939 lots, up from Friday's official 13,402 lots. In London, Liffe's benchmark May robusta closed up more than 1.25 percent to settle at $970 a tonne, near its recent 4-1/2 year high.