Coffee prices rose strongly on Wednesday as speculators piled back into the market on renewed worries about tight roaster supplies and potential problems with Latin American shipments.
In other markets, platinum group metals rose as lack of Russian supplies fed buying interest. Lumber and wheat prices rose on weather news, while oil prices closed mostly lower.
At the Coffee Sugar and Cocoa Exchange, coffee for May delivery rose 10.95 cents a pound to close at 189.70 cents.
The market had been biding time since hitting 2-1/2 year highs early last month on delays in shipments from Latin America, tight warehouse stocks and worries about the size of the coming crop in leading producer Brazil.
Prices had retraced in recent weeks as producers stepped up shipments to cash in on the higher prices. But warehouse supplies have begun to turn downward again, feeding worries.
The market has been coiling up to do something, said Smith Barney analyst Walt Spilka. The stocks at the exchange are going lower again, and they are probably just going to get tighter.
After Wednesdays close, the exchange said warehouse stocks of coffee cenrtified for delivery against futures fell 250 bags to 81,578 bags as of April 8.
Each bag weighs 132 pounds.
The continued occupation of vessels by striking Brazilian stevedores at a steel terminal at the key coffee exporting port of Santos also contributed to nervous buying, although there was no word of any delays in coffee shipments.
At the New York Mercantile Exchange, platinum and palladium prices rose for the third session in a row as the disruption to Russian supplies again was the key. Palladium for June delivery ended $5.75 an ounce higher at $159.55 after spot palladium was fixed at $157.75 in London Wednesday morning, the highest level in 21 months. July platinum ended up $3.30 an ounce at $372.60 an ounce.
With Russian supplies drying up, fabricators are increasingly dependent on world stockpiles which probably amount to a few months worth of consumption, said CRU International metals analyst Tony Warwick-Ching.
Earlier this week a Russian trade official in Tokyo said there would be no shipments of Russian palladium to Japan in April and possibly none in May, while Russian exports overall would be much lower in 1997.
Russia supplies about 60 percent of the worlds palladium and Japan accounts for about 40 percent of demand for use in automotive and electronic applications. But talks on a new annual Russia/Japan supply contract broke down last December due to Russian fiscal and administrative problems.
The Russians look like they are getting down to a critical level in their palladium stockpiles and may be adopting a deliberate strategy of lowering their exports, CPM Group analyst Ted Kempf said. At the Chicago Mercantile Exchange, lumber prices closed up the allowable daily limit of $10 per thousand board feet for a second straight day as retail lumber demand rose.
Lumber for May delivery closed at a new life-of-contract high at $401.60, up $10.
It appears that the improvement in the weather is having a little bigger impact on retail demand than most people anticipated, said Neil Schmaedick, Smith Barney Forest Products analyst. Mills are back in control with two- to three-week order files, he said. At the Chicago Board of Trade, wheat futures closed higher on jitters about cold weather and flooding threats in the US wheat growing states. Wheat for May delivery closed up 3-1/2 cents a bushel at $3.85-1/2.
Forecasters said frigid cold and snow showers blanketed much of the central United States early Wednesday.
A second blast of cold expected Thursday and Friday could damage winter wheat in Kansas and Nebraska just coming out of dormancy. We dodged a bullet for this bout of cold air but theres an even colder one headed in Friday and through the weekend, said Bob Lekberg, analyst with Goldenberg-Hehmeyer.
There is a potential for more damage to the winter wheat crop, and we need to melt a glacier to get the spring wheat in.
Heavy snowfalls in the Dakotas and Minnesota this winter had already swollen the upper Mississippi River last week, closing locks and flooding dozens of towns before the latest blast of arctic air.
Expected flooding with the next thaw will further delay planting of spring wheat, traders said.
At the New York Mercantile Exchange, crude oil closed lower after news of lower than expected gasoline stockpiles failed to spark significant buying. Crude for May delivery ended down eight cents a barrel at $19.27.
Crude is back on the defensive again. People have been wondering if oil prices had turned around, but its going to take a news event for that to happen, said Tom Bentz, analyst with ING Derivatives in New York.
Crude oil prices have fallen more than $7 a barrel this year as rising imports have created abundant supplies. The American Petroleum Institute on Tuesday said US crude oil stocks rose another 1.05 million barrels while gasoline stocks fell 1.22 million barrels in the week ended April 4.
May delivery unleaded gasoline ended down 0.47 cent at 60.70 cents a gallon and May heating oil ended up 0.22 cent at 53.11 cents a gallon.
