NEW YORK/LONDON, April 7, 2011 - Arabica coffee prices surged to close up 3 percent in heavy volume on Thursday as funds added positions and a lack of origin selling provided little resistance.
Arabica coffee moved toward a 34-year high of $2.9665 a lb hit on March 9, and tight supplies continued to underpin the market.
"Whoever was short decided to get out and I think it's encouraged a little bit of new buying today," said Rodrigo Costa, vice president of institutional sales for Newedge USA. "We don't have much origin selling, which makes it easier to move the market higher."
ICE May arabica coffee surged 7.65 cents or 2.9 percent to
finish at $2.7280 per lb.
The market scored its biggest one-day percent gain in five months on a flurry of short-covering, possibly marking a key reversal higher. After correcting lower Wednesday, fund short-covering and buying lifted prices once again.
"I'm hearing of (supermarket) orders coming in, new fresh orders for finished products in the U.S.," said Christian Wolthers, of green coffee buyers Wolthers America in Florida. This raised demand on the spot contract, he said.
Robusta coffee futures were also firm, as ample supplies from top producer Vietnam weighed. While the premium for May robustas fell against July , the premium of arabica over robustas closed around.
"There's an awful lot of robusta to come out of Vietnam, and it's started to come towards Europe," Gary Mead, an analyst at VM Group, said.
Liffe July robustas closed up $54 or 2.3 percent to $2,443 a tonne.
* May arabica coffee futures surged 7.65 cents or 2.9 percent to finish at $2.7280 per lb.
* Market surged on short-covering and fresh buying by funds - traders.
* Heavy volume as participants rolled out of May, ahead of first notice day April 20, into July - traders.
* Recent demand from U.S. supermarkets has helped lift the May contract - Christian Wolthers of Wolthers America.
* Steep rally follows Tuesday's possible key reversal higher.
Source : Reuters
