The New York Board of Trade's (NYBOT) active March arabica contract climbed 3.60 cents to settle at $1.0620 per lb, the loftiest for the contract since November 11 when it ended at $1.1085.
"It's just spec buying now," said Boyd Cruel, senior softs analyst at Aaron Trading. He said the rally had been fuelled by automatic stop-loss buy orders once the benchmark contract moved above a key technical barrier of $1.05.
"We are also seeing some end-of-the-month short covering by the funds," he said, adding "in the near-to-short term we could probably see prices get up to that $1.10 to $1.12 area."
Among other arabicas futures, the May delivery gained 3.55 cents to end at $1.0830 a lb., and more distant months firmed 2.55 to 3.45 cents. "A lot of the origins are absent because of the holidays.
They took the whole week, so we don't have any significant selling," said Fernando de la Roach of Hencoop Coffee Group. NYBOT markets were closed on Monday for the Christmas holiday.
In London, the Life's futures markets were closed on Monday and Tuesday and will resume business at normal hours on Wednesday. Estimated trading volume in NYBOT arabica futures reached 12,831 contracts, well above the 4,763 lots officially tallied on Friday.
Meanwhile, market participant's question whether a fragile supply outlook, coupled with managed-money interest can drive NYBOT's benchmark arabica contract back to or above its peak of $1.4875 hit on March 11.
In its latest monthly report, the International Coffee Organisation forecast a global supply deficit in the 2005/06 season by about 7 million 60-kg bags, followed by what could be a small supply surplus in the 2006/07 season.