* Graphic on hedging: here
By Luc Cohen
NEW YORK, March 20 (Reuters) - U.S. coffee roasters, still reeling from a sudden price spike a year ago, took advantage of the recent tumble in the arabica market to fix prices farther into the future than they have in more than three years, roasters and traders said.
The extensive forward coverage reflects a new, more cautious buying strategy from roasters amid increasingly volatile futures prices as farmers in top grower Brazil prepare to harvest a crop many fear has been hurt by last year's drought, according to interviews with seven U.S. roasters and eight U.S. traders.
The recent drop in prices has even attracted small-scale, specialty roasters, like Milwaukee-based Anodyne Coffee, which had never purchased a futures contract until February.
Steve Kessler, Anodyne's director of wholesale operations, said the company hedged about a quarter of its annual needs late last month.
"We're looking and saying okay, this is a manageable (price) level," he said. That covered large-volume purchases for the company's blends, although he still buys his premium beans with shorter-term commitments, often 90 days ahead, he said.
Earlier this month, prices hit $1.288 per lb, their weakest in just over a year, after a month-long drop as speculators exited long positions on reports of rain in Brazil.
Last week's U.S. Commodity Futures Trading Commission's weekly Commitment of Traders report showed commercial players, including roasters and traders, held their biggest long arabica futures position on ICE Futures U.S. on records going back to 2006.
The coverage is also pronounced among larger roasters who did not book far forward in November 2013 when arabica hit seven-year lows just above $1 a pound, only to watch prices more than double within months for their biggest rally in years as Brazil's dry spell parched trees and ravaged crops.
"They're kicking themselves and covering much further out," said Jessica Sellers, vice president of trading at Serengeti Trading, a Dripping Springs, Texas-based importer.
Sellers and other U.S. traders said several roaster clients have started extending futures coverage into the second half of 2016, the longest most have been since 2011, when they booked on the way up from $2 a lb to a near 14-year high above $3.
This time, roasters fixed forward with long futures positions on the way down from prices that approached $1.90 a lb in mid-January, reflecting a desire to lock in prices at levels that looked attractive compared to recent history, rather than waiting for prices to show signs of hitting a bottom.
The more cautious strategy comes as the impact of Brazil's dry weather on its 2015/16 coffee crop remains unclear.
"We're not picking bottoms," George Kneisel, vice president for commodities at roaster Massimo Zanetti Beverage USA in Norfolk, Virginia, said.
Several of the U.S.'s largest roasters, including Starbucks and Keurig Green Mountain locked in prices on more than 90 percent of their coffee needs for 2015 by the end of the 2014 calendar year.
The surge in forward coverage could limit the price spike that many roasters are hedging against, traders said. If prices were to rise and roasters remained well-covered, there would be fewer buyers left in the market to contribute to the rally. (Reporting By Luc Cohen; Editing by Diane Craft)