New York/London: Arabica coffee futures soared on Friday, posting the biggest jump in 16 months on concerns about heavy rains in Central America, dwindling certified stocks and a lack of producer selling.
Sugar and cocoa finished mixed.
"One small fundamental factor that is important is the certified [stocks] drawdown. Then you have the macro picture, which is somehow driving things higher with Europe, and then third you have piling on," said one US coffee dealer, referring to buying that was spurred by the rally.
In December arabica futures on ICE jumped 13.20 cents, or 5.7 per cent, to close at $2.4485 (Dh8.99) per pound, the biggest daily percentage gain since June 2010. It peaked at $2.4670. Volume rose above 28,000 lots, the highest since September 22, preliminary Thomson Reuters data showed.
Heavy rains in Central America, where high-quality washed arabica beans are grown, helped lift the market, which rallied in heavy volume and attracted chart-based buying after hitting key levels, dealers said.
The US dollar hit a five-week low against a basket of currencies, making coffee more attractive to buyers holding currencies other than the greenback. Automatic buy stops and short-covering were triggered when the December arabica contract hit $2.3710 and $2.40 per pound.
A lack of origin selling due to concerns over crop damage in Central America allowed the market to jump. Additionally, producers in top grower Brazil, where harvest was recently completed, held onto their beans and exporters there were viewed as oversold.
ICE certified arabica stocks dropped nearly 30,000 bags to 1,335,857 bags by October 20, the lowest since February 2000, ICE data showed, while certified robusta stocks held in NYSE Liffe nominated warehouses fell to 350,000 tonnes as of October 17 from 367,560 tonnes on October 3.
"The producer is really determined not to sell. He is holding on to his coffee and doesn't want to sell," said Andre Lounine, trader at the Thesi brokerage in Varginha, Brazil. The rains in Central America are also affecting the market.
In London November robusta coffee closed up $54, or three per cent, at $1,868 per tonne.
Raw sugar futures fell on investor sales and talk that cash business seems to slow down when the key March contract exceeds levels consumers are willing to pay, analysts said.