Coffee nears decade high on mounting supply worries

Coffee extended this week’s breakneck surge that’s driven futures to the highest in almost a decade on the back of mounting supply worries.

Coffee extended this week’s breakneck surge that’s driven futures to the highest in almost a decade on the back of mounting supply worries.

Arabica coffee has jumped about 85 per cent in New York this year after crops in top producer Brazil were severely damaged by drought and frost. Other key suppliers have also faced setbacks, while global logistics problems have disrupted shipment. Prices have been given a fresh boost as traders moved to close out short positions and stem losses.

“The perfect storm formed with longs having newfound conviction, forcing some of the industry to add short cover,” broker Sucden Financial Ltd. said in a note. “The rally shows no sign of slowing.”

The most-active arabica contract climbed as much as 1.5 per cent to US$2.3825 a pound in New York, the highest since January 2012, and was last at US$2.377. Prices are up about 16 per cent this month. Robusta coffee added 0.4 per cent in London.

In other soft commodities, raw sugar rose for a third day to touch the highest in more than a month. Cocoa advanced for a fourth day.