NEW YORK/LONDON: Arabica coffee futures on ICE rebounded on Wednesday, erasing the prior session’s losses and setting a new seven-month high as speculators covered short positions on mounting concerns about cold, potentially frost-inducing weather in top-grower Brazil.

ICE Futures US soft agricultural commodity futures and options markets will be closed on Thursday, July 4, for the Independence Day holiday.

September arabica coffee settled up 4 cents, or 3.7%, at $1.1365 per lb, after peaking at $1.15, its highest since Nov. 29.

This was the contract’s seventh consecutive close above the 200-day moving average, a technically supportive indicator.

Prices have been buoyed by concerns about cold weather in Brazil, dealers said.

South and central Brazil are expected to be hit by the coldest temperatures of the year in coming days,

and frost will likely form in some coffee areas, but it is unlikely to be widespread and will not be intense, forecasts indicate.

“Industry is not panicking at all about this frost but overall prices are still pretty cheap so the market needed some kind of (rebalancing). We’re probably back to where we should be if we look at fundamentals,” said a dealer.

Meanwhile, Zimbabwe’s languishing coffee industry is getting a jolt from companies such as Nestle that are increasingly willing to pay a premium for Zimbabwean beans.

September robusta coffee settled up $11, or 0.8%, at $1,455 per tonne.

October raw sugar settled up 0.19 cent, or 1.5%, at 12.54 cents per lb, following three consecutive days of losses. Prices fell on Tuesday to a more than one-month low.

Prices got a boost from pre-holiday short covering, dealers said.

The market continues is underpinned by concerns that a weaker-than-normal monsoon in India, a top producer, could curtail production there just as top grower Brazil reduces its output in favour of ethanol.

August white sugar settled up $1, or 0.3%, at $320.70 per tonne.

September New York cocoa settled down $39, or 1.6%, at $2,433 per tonne.

This was the contract’s eighth negative finish in 10 sessions, with the market drifting from last month’s nearly one-year price peak on news that top growers Ivory Coast and Ghana would set a floor price for their beans.

US food maker Mars Inc. supports the floor price decision, a senior executive told Reuters, becoming one of the first major chocolate companies to back the initiative.

September London cocoa settled down 20 pounds, or 1.1%, at 1,809 pounds per tonne.—Reuters