Coffee Jumps Most in Three Weeks as Excessive Rains Damage Colombia Crops

Arabica-coffee futures jumped the most in three weeks as excessive rain hurt crops in Colombia, the second-largest grower.

Flooding has threatened crops, damaged roads and delayed agriculture shipments, the U.S. Department of Agriculture’s Foreign Agricultural Service said on Dec. 10. The unusually heavy rain from a La Nina weather pattern is forecast to last until the first quarter of 2011, the agency said. Prices have surged 60 percent this year, heading for the biggest annual gain since 1994.

“Fundamentals are very supportive,” said Tom Mikulski, a senior market-strategist at Lind-Waldock in Chicago. “Technically, coffee looks strong, so it’s a green signal for coffee to rise.”

Arabica coffee for March delivery added 7.95 cents, or 3.8 percent, to settle at $2.1755 a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest gain since Nov. 18. Earlier, the commodity climbed to $2.1795, the highest since Nov. 10.

A shortage of high-quality arabica coffee has led to “precariousness of the supply/demand balance,” the International Coffee Organization said in a report on Dec. 10.

A La Nina weather event is caused by cooling equatorial waters in the Pacific Ocean. Brazil is the biggest producer of arabica beans.

In London, robusta-coffee futures for March delivery added $26, or 1.4 percent, to $1,934 a metric ton on NYSE Liffe.