(Bloomberg) -- Robusta coffee, the type used in instant drinks, jumped to the highest in more than four years as buyers look to take beans from exchange warehouses to replenish stockpiles.
Futures have jumped almost 60% in London this year as adverse weather hurt crops, while logistics headaches, including a shortage of shipping containers, curbed exports from Vietnam. Nestle SA, the owner of the Nescafe brand, told investors and analysts last week that coffee would get more expensive next year as input costs rise.
Robusta rallied as much as 3.7% in London on Monday. The gain comes ahead of traders needing to declare their intentions to take delivery or deliver against the November contract.
“First notice day is tomorrow, so you would expect quite a bit of volatility, especially in the first month contract. That seems to be what we're seeing today,” Rabobank analyst Carlos Mera said by phone. “There's a lot of interest in the certified stocks -- that's replacement for the coffee that cannot be shipped on time from origin.”
Robusta for January delivery settled 2.5% higher at $2,195 a metric ton in London, after earlier hitting its highest price for a most-active contract since February 2017. Meanwhile, arabica -- the variety favored by coffee chains -- rose as much as 2%.
“The higher the coffee market rises, the more margin pressure there will be on the shorts, potentially leading to more forced short closeouts,” Charles Branch, head of softs and agricultural commodities at brokerage Britania Global Markets Ltd., said by email.
Short-covering by traders typically helps to lift prices higher.
In other softs, raw sugar advanced 1.6% and cocoa futures gained 1.3%, rising for its third straight day in New York. Cotton futures rose 0.3%.
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