Short Covering Boosts Coffee Prices

Coffee prices rose Monday, with some analysts attributing the gains to investors covering their short positions.

Arabica coffee for March delivery climbed 1% to $1.219 a pound on the ICE Futures U.S. exchange after ending a seven-session losing streak last Wednesday.

Speculators have been dictating price movements recently, with some traders closing out earlier bets that prices would fall, said Joe Ricupero, vice president at R.J. O'Brien and Associates.

"The speculators were short and they're just covering their short positions" before the end of the year, he said.

The latest data from the Commodity Futures Trading Commission Friday for the week ended Dec. 12 showed a build up in short positions by hedge funds and other speculative investors.

Also Friday, forecasts from the U.S. Department of Agriculture showed a slight drop in coffee production expected in 2017-18 from a year earlier and record consumption, though supply estimates increased slightly from the agency's June forecasts.

The data came after Rabobank released a report Wednesday showing a 6.5% year-over-year growth in net import growth in 17 non-coffee producing countries, with strong net imports into Turkey, Russia, Taiwan, South Korea, Australia and Argentina. The firm said it expects arabica prices to end 2018 at $1.34 a pound. However, it downgraded its projections for a supply-demand deficit in coffee in 2017/2018 due to an expected uptick in production and lower demand.

Mr. Ricupero said he expects speculators to continue heavily impacting price movements unless unanticipated weather disruptions or data change the outlook for coffee.

In other markets, cocoa for March rose 2.4% to $1,922 a ton, March raw sugar added 0.7% to 13.76 cents a pound, frozen concentrated orange juice was down 2.4% at $1.41 a pound and March cotton fell 0.9% to 75.20 cents a pound.

--Write to Amrith Ramkumar at amrith.ramkumar@wsj.com

(END) Dow Jones Newswires

December 18, 2017 15:01 ET (20:01 GMT)