Arabica coffee futures rocketed to a 34-year peak Monday on investment fund buying as tight supplies and a paucity of producer sales stoked a powerful rally in the world's prime breakfast beverage.
Cocoa futures clawed higher as fighting escalated in top producer Ivory Coast while sugar moved up in consolidation business. Volumes in U.S. soft commodities were light, running below their 30-day norms, Thomson Reuters data showed.
ICE's May arabica coffee futures went up 6.30 cents to trade at $2.7915 per lb, having hit a 34-year intra-day high at $2.8185. London's May robusta coffee was up $11 to deal at 2,401 per tonne, down from the lifetime peak at $2,429.
"Coffee's on a tear," Larry Young, president of commodity firm Covenant Trading in Chicago, said. "$3 coffee's definitely what people are talking about now."
"It's presumably a large fund or managed money that has decided now is the time (to buy coffee)," said Gary Mead, analyst with VM Group in London.
Hernando De La Roche, director of Hencorp Coffee Group, said the market continued to struggle from tight supplies of washed arabica beans.
"Right now there is some new buying interest from funds that's moving the market," he said.
Vietnam, the world's top robusta producer, has seen domestic coffee prices repeatedly break through record levels in recent weeks.
Young said arabica futures are a "little overdone" and a retracement back to $2.50 is possible, but the strength of the market will reassert itself and a run toward $3 or higher will unfold in the weeks ahead.
COCOA UP ON IVORIAN FIGHTING
A bitter power struggle in top cocoa producer Ivory Coast which has degenerated into virtual civil war kept cocoa near 32-year highs.
New York's May cocoa contract rose $5 to settle at $3,662 per tonne. Liffe's May cocoa contract added 6 pounds to finish at 2,346 pounds per tonne.
Ivory Coast rebels have seized a third town in the west of the African country, forces loyal to disputed incumbent Laurent Gbabgo said on Monday, adding reinforcements were on the way to try and reclaim it.
An export ban, sanctions against the country and a crippled banking system have severely hindered activity in Ivory Coast's cocoa industry.
But cocoa supplies remain plentiful and there is no fundamental shortage of beans.
"I think everyone's figuring there's a lot of cocoa in the world and somehow it's going to find its way out of Ivory Coast, and I think that's what's keeping this market in check," said one dealer.
Sugar prices were also higher, with whites particularly firm and catching up with gains in ICE raws late on Friday after the Liffe market had shut.
"London is having to catch up with New York, which rallied equivalent to $10 after London closed," said James Kirkup, head of sugar brokerage at ABN AMRO (Markets) UK Ltd.
New York's May raw sugar contract gained 0.17 cent to trade at 30.05 cents per lb. London's May white sugar futures rose $13 to trade at $748.70 per tonne.
Dealers said the sugar market was tracking nominations of vessels by Cargill after it received almost 1 million tonnes of raw sugar against expiry of the ICE March contract at the end of February.
"If they (Cargill) nominate ships at a speedy rate, the market would interpret that as constructive," Kirkup said.
Broker Sucden said raw sugar prices were likely to drift sideways unless fresh fundamental news moved the market.
"We expect a period of consolidation to follow between 29 and 31 cents basis May New York and between $720 and $760 basis May London," said Sucden Financial's Nick Penney.
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