Coffee futures at highest since June

By Myra P. Saefong, MarketWatch

SAN FRANCISCO (MarketWatch) — Coffee futures climbed to a more than six-month high Friday, poised to extend their winning streak to five sessions as traders continued to worry about supplies.

March coffee climbed as high as $1.2025 a pound on the New York Board of Trade, touching its highest intraday level since June 23. The contract last traded at $1.19 a pound, up 1.55 cents, or 1.3%.

Prices have been climbing from $1.069 close on Dec. 29, so they’re up over 10% in five trading sessions.

“The fundamental situation is tight for the first two quarters of 2006, with inventories on the decline, said Rodrigo Costa, an analyst at Fimat USA.

The current crop cycle “will run a deficit of 7 to 9 million bags (worldwide) and the perspective of a bump production in Brazil for the upcoming 2006/2007 crop was reviewed from 50 million bags to 43/ 45 million bags recently,” he said.

The market is also benefiting from “hurricane-reduced crops in other growing areas” such as New Orleans, according to Chris Kraft, an analyst at CKFutures.com.

Unrest in Venezuela may also be providing support to coffee prices. Coffee has been disappearing from stores in Venezuela as producers protest price controls, according to a report from the Associated Press Thursday.

Coffee fell under the country’s price controls for staple foods back in early 2003, the news agency said, and prices set in early December sparked protests.