NEW YORK/LONDON: Arabica coffee futures barreled to its highest level in over three months on Friday due to tight supplies of high quality beans but the market was seen as heavily overbought and due for a correction.
Sugar and cocoa futures climbed as well, buoyed in part by stronger outside markets where investors believe US Federal Reserve Chairman Ben Bernanke left the door open for further stimulus to bolster shaky world economic growth.
Liffe's London-based soft commodity markets will be shut on Monday for a UK public holiday. They will reopen on Tuesday.
New York's December arabica coffee futures gained 3.95 cents to trade at $2.7945 a lb at 12:49 p.m. (1649 GMT), having hit a session peak at $2.7995.
London's November robusta coffee on Liffe settled steady at $2,362 per tonne.
"We could see the $3.00 (a lb) level but I would rather stay away because this market is very, very overbought," said Romain Lathiere, fund manager with Diapason Commodities Management.
Arabica coffee futures have risen for 14 straight sessions and were on track to extend that run, but may now be vulnerable to a downside correction.
Price Group analyst Jack Scoville said that along with tight supplies, another source of concern for some in the coffee trade is the threat poised by Hurricane Irene to New York city, the top coffee port in the United States.
Some brokers have been trying to get their coffee out of warehouses in the area before the storm strikes on Sunday.
In 2005, Hurricane Katrina slammed into New Orleans and wrecked coffee warehouses in that city, drenching beans in floods that made the coffee undeliverable to the exchange.
SUGAR AND COCOA UP
Raw sugar futures grinded higher as the market absorbed further forecasts for cuts in the cane crop of top producer/exporter Brazil.
New York's October raw sugar futures gained 0.37 cent to trade at 30.03 cents a lb at 12:51 p.m. London's October white sugar contract went up $9.40 to finish at $780.60 a tonne.
Cane industry association Unica on Thursday put Brazil's key center-south's sugar output this season at 31.57 million tonnes, down 2.5 percent from its July estimate of 32.38 million tonnes.
Consultancy Kingsman pegged center-south output in 2011/12 at 30.63 million tonnes.
"While the (Unica and Kingsman) reports show the Brazil CS crop is indeed going to be worse than anticipated earlier in the year, estimates are well above some others ... and it may well be that lower figures have been priced into the market already," brokers Sucden Financial said in a daily update.
Earlier this week, analyst Canaplan estimated Brazil CS sugar output at 28-28.5 million tonnes, well below the latest forecasts.
Cocoa futures were higher as the market continued to eye prospects for 2011/12 crops when the global balance is expected to tighten after a large surplus in 2010/11.
A world cocoa surplus of 325,000 tonnes was expected in 2010/11, the International Cocoa Organisation (ICCO) said in its quarterly bulletin.
New York's December cocoa contract rose $48 to close at $3,075 per tonne and London's December cocoa futures added 29 pounds to settle at 1,939 pounds a tonne.
Copyright Reuters, 2011
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