Coffee prices jumped, approaching a 12-year high, as hedge funds boosted purchases and the dollar’s slump enhanced the allure of commodities. Cocoa also gained.

The dollar fell to a three-month low against a basket of six major currencies. The Reuters/Jefferies CRB Index of 19 raw materials surged to the highest level since May 5. In the week ended July 20, net-long positions held by hedge-fund managers and other large speculators in New York coffee futures rose for the sixth straight week to the highest level since March 2008.

“The market broke through $1.70, and that triggered a lot of buying from speculators and funds,” said Hernando de la Roche, a director at Hencorp Futures in Miami. Coffee hasn’t closed above $1.70 since February 1998.

Arabica coffee for September delivery surged 4.5 cents, or 2.7 percent, to $1.719 a pound at 11:18 a.m. on ICE Futures U.S. in New York. Earlier, the price reached $1.746, the highest level for a most-active contract since June 24. On that date, the commodity reached a 12-year high of $1.765.

“The dollar is falling, giving commodities a boost in general,” said Fain Shaffer, the president of Infinity Trading Corp in Medford, Oregon.

Arabica prices in Brazil, the world’s biggest producer, will stay near a five-year high as rising demand outpaces supply, according to Cepea, a research group at the University of Sao Paulo.

On London’s Liffe exchange, robusta-coffee futures for September delivery gained $16, or 0.9 percent, to $1,737 a metric ton.

Cocoa futures for September delivery climbed $30, or 1 percent, to $3,040 a ton in New York.

Cocoa futures for September delivery dropped 2 pounds to 2,269 pounds ($3,536) a ton in London.

Source: Bloomberg

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