Analysts said they saw prices remaining high as far forward as 2008.
The front-month September contract
"It (the market) is building on short covering. Pressure is on the shorts," one dealer said.
Traders said the buying on the front-month contract was spilling over into the benchmark November contract
Total volume across all the contracts was a strong 18,098 lots.
September's premium against November
Robusta prices, which are about 34 percent higher than at the start of the year, have soared in recent weeks after news of flood damage to exchange stocks in the Italian port of Trieste, just as supplies from the world's number one robusta producer Vietnam started to run out.
STOCKS RUN DOWN
Helmut Ahlfeld of German analyst F.0. Licht said current supply tightness was expected to be resolved by the next Vietnamese crop, but that 2007/08 could see a significant supply shortage.
"In the end, 2006/07 is expected to be balanced...The problem could be 2007/08, if the Brazilian crop is as bad as producers say," Ahlfeld said.
Kona Haque, commodities analyst with the Economist Intelligence Unit, saw prices remaining high until the last quarter of 2007.
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NY coffee gains on robusta squeeze, Brazil chill
NEW YORK, Sept 5 (Reuters) - Arabica coffee futures climbed nearly three percent on Tuesday, fueled by market worries about tight robusta supply and cooling temperatures in top coffee producer Brazil, market sources said.
The New York Board of Trade's arabica coffee contract for December
March
"In the short term, the London market is really helping," said Rohit Savant, a commodities analyst at CPM Group.
Indeed, nearby robusta futures prices in London have been hovering at their loftiest levels in more than seven years thanks to a near-term supply crunch for the bean mainly used for soluble coffee.
The LIFFE's benchmark November
"It's hard to watch one variety of coffee skyrocket and sell yours," said James Cordier, president of Liberty Trading Group. "The shortage is going to last another 35 to 40 days and then there is going to be ample robusta. But for now, if you are short the market, you don't have anything to deliver," he said.
Limited supplies of fresh robusta beans from top grower Vietnam have hit the market but prices, supported by thin stocks, were still at record highs, traders from the region said [nHAN312730].
Meanwhile, temperatures in Brazil's south fell to their lowest levels in decades after a polar air mass followed rains into the region, but there was no threat of crop-damaging frost, said private Brazilian forecaster Somar [nN050FWEAT].
On Wednesday morning, temperatures in the top coffee growing state will fall to 1 degree Celsius (34 Fahrenheit) at the Pocos de Caldas airport. But temperatures in other nearby producing regions will not fall as low, Somar said.
Frost could harm the coffee trees developing for the 2007/08 crop, which is already expected to be significantly smaller than the 41.6 million 60-kg bags officially estimated for the 2006/07 crop.
"Very cool temperatures tonight are not expected to be damaging to trees," said U.S. forecaster Meteorlogix. "Weekend rainfall in major coffee areas of Sao Paulo and Minas Gerais, Brazil, has helped to improve conditions for the upcoming spring flowering of the trees," it said.
Still, the Brazilian government-run National Meteorological Institute (Inmet), which is traditionally more bullish on frost in Brazil, said there was still a risk of crop damaging cold in southern Minas and northern Sao Paulo.
Elsewhere, coffee exports in Costa Rica rose 9 percent in August versus the same month a year ago, but cumulative exports from the October-August growing season were down 12 percent at 1.38 million bags compared with the same period in 2004/05, growers group ICAFE said.
NYBOT arabica futures trading volume reached an estimated 13,392 contracts, up from the 10,146 lots officially tallied the previous session.
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