Benchmark arabica coffee futures rose nearly 2 percent on Tuesday as speculators bought back their short positions amid a general rally in the commodity sector, market sources said.
"The speculators were short-covering and we saw a lot of switches," a coffee trader said, referring to participants trading the price spreads of the different arabica contracts.
The New York Board of Trade's active coffee contract for July delivery rose 1.80 cents to settle at $1.0140 per lb., the strongest settlement since May 18, after ranging from 99.30 cents to $1.0175.
September rallied the same to finish at $1.0430 a lb., and back months advanced 1.80 to 1.95 cents.
Investors poured back into commodities on Tuesday, driving up gold, oil and copper and reversing last week's broad sell-off.
"It was a lot of fund business across the speculative markets," said a coffee trader at an investment bank. "Most commodities are up, and coffee is going along with the trend." At 1:15 pm EDT (1715 GMT), the Reuters/Jefferies CRB Index of 19 commodity futures was up 2.32 percent at 352.25.
Coffee bulls also found some help from a rebounding Brazilian currency, which could have deterred origin sales in the dollar-denominated market from the top coffee grower, traders said.
The real firmed 1.4 percent to 2.258 per dollar in the session, after plunging about 3.7 percent on Monday. In London, the July robusta contract concluded up 1.08 percent, or $12, at $1,124 a tonne.
Coffee futures trading volume reached an estimated 17,250 lots on the NYBOT, above the 14,558 contracts officially tallied the previous day.