Coffee prices reached their highest in more than 12 years on Monday amid "concerted buying", even as sector leader Nestor Osorio warned of the threat of a "correction" as fresh bean supplies come onstream.

New York's best-traded contract, for December delivery, climbed 3.0% to 182.90 cents a pound, the best for a nearest-but-one contract since December 1997.

The spot October lot jumped 2.7% to 180.15 cents a pound, within half a cent of a high set two weeks ago.

The market had been moving up since New York trade opened in earnest, Ralph Hawes, at Sucden Financial, told Agrimoney.com.

"There has been concerted buying. Something is determined to buy coffee whether fund or otherwise."

Crop downgrades 

The jump followed a downgrade by Nestor Osorio, the executive director of the International Coffee Organisation, to his forecast for 2010-11 production in Brazil, the world's top producer, with a warning that "adverse weather" may affect output in second-ranked Vietnam too.

Mr Osorio cut his forecast for the Brazilian crop by 3m bags to 47m bags, way below the figures of 55m bags which some analysts had predicted earlier in the season and meaning the crop no longer looks set to beat the record 48.8m bags set six years ago.

In Vietnam - which has remained wet after suffering heavy rains last month, catching some of the downpours from Typhoon Chanthu which lashed southern China - "current climatic problems" could mean the coffee crop fails to reach the "high level" of 16m-18m bags initially expected.

"Adverse weather conditions could affect the country's production prospects," Mr Osorio said.

'Correction may occur'

Nonetheless, he left his estimate for the total world crop unchanged at 133m-135m tonnes, without expanding on his rationale, implying a rise of at least 11% in production this year.

Indeed, the jump in prices of one-third since the end of May was down to "short-term supply problems" prompting a drawdown on stocks which, in New York exchange inventories, had reached historic lows.

 "Despite increased production in several countries, this price increase indicates some uncertainty relating to short-term supply problems."

He added: "As soon as supplies from crop year 2010-11 become available, a correction to prices may occur."

Arabica vs robusta 

Many Brazilian growers have already cut hopes for Brazil's crop, including Cooxupe, the world's biggest coffee co-operative, which has warned that the harvest would fail to meet its earlier estimate of 50m bags.

However, much of the concern has surrounded robusta beans, the secondary coffee variety to arabica in Brazil, following a drought earlier in the year in the major growing state of Espirito Santo.