CSCE coffee futures overcame some profit-taking to close higher on Monday, as fund and local buying found spotty producer selling and as sharp rises in other commodities lifted farmers' expectations, brokers said.
"Brazil is not in a rush to sell their coffee with soybean prices soaring on speculation that Brazil's 2003/04 soybean crop could be smaller than expected," said one commission house broker with clients in Brazil, explaining the psychology behind Monday's advance.
Brazil is the world's second largest producer of soybeans and the largest coffee grower and exporter.
Chicago Board of Trade(CBOT) May soybeans rallied to a new 15-1/2 year top of $10.62 per bushel.
US soybean prices surged on Monday amid strong global demand, particularly from China, the world's largest consumer of soybeans and soy products, traders and analysts said.
The active May arabica future firmed 0.55 cent to close at 77.35 cents per lb, with a 76.30-78.10 cent range.
"This is a CRB rally. Coffee was higher, cocoa is up, sugar is up," said James Cordier resident of Liberty Trading Group referring to the Reuters CRB Index.
July coffee settled at 79.40 cents, up 0.55 cent, and the back months all finished 0.65 cent higher.
Estimated futures volume edged down to 9,678 lots Monday from 10,156 lots Friday.
In the option pit there were 3,291 calls traded and 2,553 puts.
In Friday's Commitments of Traders (COT) report by the CFTC, the net speculative futures long position in coffee rose to 29,197 contracts as of March 16 from 24,658 contracts as of March 9.
"With just one fund raising nearly $3 billion dollars in less than six months to go into commodities, the funds have really deep pockets now," said one trader. The non reportable or small speculator net long position was increased to 12,233 lots from 10,221 lots the previous week.
Chartists pegged support for May at 75.35 cents followed by 74.50 cents, with resistance at 77.75 cents and 78.50 cents.
"Coffee appears to have completed a bull flag, which supports a bullish wave count," according to Citigroup's futures department.