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US coffee futures jumped four percent on Wednesday, buoyed in large part by speculators buying back their short positions from a recent three-week low and lingering worries about supply tightness, sources said.

Traders and analysts said the buying had accelerated once the front-month contract moved above $1 a lb, the first time since last Thursday.

"It was short-covering," said Boyd Cruel, senior softs analyst at Alaron Trading. "We hit some stops above a buck," he said, adding that "there weren't many sellers."

The New York Board of Trade's active December arabica contract rose 3.95 cents, or about 4.1 percent, to settle at $1.0105 a lb, after trading from 97.75 cents to $1.0125 a lb. The top trade was the highest since October 27.

The December delivery had been down more than 8 percent from last week's peak of $1.0525 a lb.

"I think people are starting to look at the possible physical tightness," said a coffee broker, pointing to recent reports of crop losses and early harvest delays caused by heavy rains in Central America and Vietnam.

The broker pegged $1.0250 as the December contract's next point of technical resistance. "If we can get through there then this (rally) can have some legs to it," he added.

Among other arabicas, March climbed 4.0 cents to end at $1.0465 a lb, and back month deliveries gained 1.35 to 3.90 cents. Futures trading turnover was brisk, estimated at 14,747 contracts. That compared with 13,320 contracts officially tallied the previous session.

Copyright Reuters, 2005


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