Coffee prices soar on lack of availability

Coffee prices soared on Friday as a lack of availability in the physical market left investors scrambling to cover their positions.

Robusta, the lower-quality bean used mainly in instant coffee, spiked to a peak of $1,579 a tonne on Friday on the London market, its highest in over a year. Liffe July robusta was up as much as 18.2 per cent over the week.

Higher-quality arabica coffee gained 11 per cent on the week to $1.485 a pound in New York.

A number of funds had been betting on lower prices for the bean, traders said, but lower-than- expected physical supplies forced them to reverse their positions.

Traders added that the price of robusta in the physical markets had been running significantly higher than the London futures price. That may have led some coffee consumers to decide to hold futures to expiry and take physical delivery of the bean, traders said, squeezing the market.

“There’s a sense of panic around,” one trader added...Read More