Coffee Prices Gain on Forecast Output to Drop; Cocoa Climbs
February 08, 2010, 2:52 PM ESTBy Elizabeth Campbell
Feb. 8 (Bloomberg) -- Coffee futures rose for the first time in four sessions on forecasts that global output will drop and demand will outpace supplies. Cocoa posted the biggest gain in almost three weeks.
World output will fall to 123.6 million bags in the crop year ending Sept. 30 from 128.2 million bags in the previous year, the London-based International Coffee organization said today. Demand will reach 130 million to 132 million bags, Nestor Osorio, the group’s executive director, said at a conference in Moscow. A bag weighs 60 kilograms (132 pounds).
“Coffee is going to be pretty tight,” said John Caruso, a senior market strategist at Lind-Waldock, a unit of MF Global Holdings Ltd. in Chicago. “The outlook has been fairly bullish.”
Arabica-coffee futures for March delivery rose 1.85 cents, or 1.4 percent, to $1.3065 a pound on ICE Futures U.S. in New York. The price dropped 4.6 percent in the previous three sessions.
Production in Brazil, the world’s largest grower, may total 44 million bags this year, less than the Agriculture Ministry’s forecast for between 45.9 million bags and 48.7 million bags, as rainfall damages the crop, a government meteorologist said.
Coffee has climbed 9.3 percent in the past year as adverse weather damaged crops in Brazil and Colombia.
Cocoa futures for May delivery climbed $53, or 1.8 percent, to settle at $3,054 a metric ton in New York, the biggest gain for a most-active contract since Jan. 19.
Last week, the price dropped 5.7 percent, bringing a two- week slump to 12 percent.
The price rebounded today partly “on a correction on the big down move,” said Bill Frejlich, a broker in Chicago at Fox Investments, an MF Global unit.
The price has climbed 7.8 percent in the past year on speculation that global supplies will dwindle.
--With assistance from M. Shankar in London, Maria Kolesnikova in Moscow and Katia Cortes in Brasilia. Editors: Daniel Enoch, Ted Bunker.
To contact the reporter on this story: Elizabeth Campbell in New York at ecampbell14@bloomberg.net.
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.
