London coffee futures touched a two-month high on the most active January contract on Tuesday, boosted mainly by speculative buying, traders said. "It is mainly speculative and option buying in both New York and London. We also have some fund buying," a trader said.
Liffe January peaked at $1,044 a tonne but then slipped back slightly to end at $1,030, up $42, or 4.25 percent.
Traders and analysts said fund buying was triggered by the break above $1,017 on January, the peak of an October rally.
"A lot of these funds seem to be momentum-based traders, and the market has broken through quite an important technical level. It looks like it moved through the October highs, which seemed to be an area that was quite difficult to build on during the month of October," said Mark Keenan, fund manager at UK-based MPC Commodity Fund.
Funds have shown interest in the coffee markets since a recent series of natural disasters in the Americas sparked concern about supply.
"London may see further gains depending on New York. We expect to see more speculative buying coming in," CoffeeNetwork analyst Andrea Thompson said.
Prices have strengthened in the past week in Vietnam, the world's key producer of robusta coffee, as supplies of old beans declined and farmers held back beans from the new harvest.
Traders said farmers in the Central Highlands coffee belt would accelerate harvesting from late this month. The region produces around 80 percent of Vietnam's coffee annually.
The Vietnam Coffee and Cocoa Association has said the harvest, which started last month, would produce 10.0-10.5 million 60-kg bags, against 12.5 million from the harvest that ended in January.
SUGAR JUST ABOVE 15-WEEK LOW:
London white sugar futures closed just above an earlier 15-week low on the front month, weakened by producer and speculative selling, dealers said.
"There has been good volume with producers selling and the specs (speculators) as well. There is a lot of EU sugar around," one dealer said.
Front month December, which expires on November 15, closed $3.00 lower at $273.00 a tonne after earlier dipping to a 15-week low of $271.50.
Dealers said sentiment that plenty of European Union white sugar was available to deliver against December had helped to trigger selling.
White sugar futures have been on the retreat ever since an order by the World Trade Organisation that gave the EU less time than expected to place surplus supply on the world market.
March closed $4.10 lower at $283.00. Active rolling forward of positions out of December into March contributed to the total volume of 6,924 lots.
COCOA HIGHER: London cocoa futures crept higher on Tuesday as industry buying helped the market return to its recent narrow range after it earlier set a fresh six-week low, traders said.
"We are in about a seven pound range at the moment. We thought we had broken down out of it yesterday but today the market has refused to make any real net downside progress," a market source said.
Liffe's front-month December contract settled five pounds up at 803 pounds a tonne after the benchmark contract momentarily touched a fresh six-week low of 795 earlier. Total volume was 9,910 lots.
"There is quite a bit of paper changing hands, there has been some hedging going on and I think industry are buying as well, so the market seems quite happy to sit around this level and trade." he added.
Data showed signs of good bean supplies from Ivory Coast.
Arrivals at the port of San Pedro reached 86,230 tonnes by October 30 this year, up 32 percent from the 65,291 tonnes delivered to the port at the same time last year. The data also showed farmgate prices in Ivory Coast were mainly lower from October 31 to November 6.