Coffee jumped 3% in early deals, placing a return to $2 a pound on the agenda for the first time since 1997, after Colombia's coffee production revival looked like falling short of hitting its target.

New York's December arabica contract, the best-traded lot, surged 3.3% to 198.65 cents a pound in early deals. The near-term September lot added 2.2% to 194.85 cents a pound, although both lots fell victim to profit-taking later in the day.

Neither spot nor nearest-but-one contracts have traded at $2 a pound in New York since 1997.

However, this mark was "looming", Ralph Hawes at Sucden Financial, said, given the degree of fund buying which was appearing in the market.

"We have that well in sight," he said.

Colombia rebound

Wednesday's rise followed the release of data from Colombia, the world's second-ranked arabica producer, that output hit 615,000 bags last month, 55% higher than in August last year.

Exports were, at 596,000 bags, 26% higher than a year before, when output was hit by a lack of rainfall at a time when a government-backed scheme to replace ageing trees had already curbed temporarily the country's production potential.

Nonetheless, the rebound in output was, on some calculations, too small to leave the country on track to hit a full-year target of 10m bags.

While production typically rises in the last few months of the year, it has fallen short of the 4.6m bags required to hit the target even in the boom years of 2006 and 2007, on Agrimoney.com calculations.

Funds rule?

Mr Hawes added that, even assuming a poor Colombian crop, it was "difficult to apply fundamentals at the moment" to coffee prices, given the degree of fund involvement.

The 18% rally in coffee from a low two weeks ago appeared to have attracted "black box funds", employing mathematical formulae aimed at exploiting soaring markets.

"New York now appears to be completely controlled by funds and managed money, as they punch far above the weight of anything the trade can muster," he said.

"'Professionals' try to give reasons for the daily moves, when for the most part it comes down to cash, or the lack of it, especially to pay the huge margin requirements.

"Let's hope this doesn't become a busted futures market as it becomes virtually unusable for some in the coffee trade."

Closing prices

New York's December contract finished up 1.2% at 194.55 cents a pound, with the September lot adding 1.3% to 193.10 cents a pound, both 13-year highs.