Bloomberg News

Robusta Coffee Increases on Supply Concerns; Cocoa Advances

March 01, 2012

Robusta coffee climbed for a second day in London on signs supplies will be limited before the start of the crop in Indonesia, the world’s third-largest producer. Cocoa advanced.

Farmers in Indonesia will harvest 9.1 million bags in the 2012-13 season that starts in April, 38 percent more than a year earlier, according to Volcafe, the coffee unit of ED&F Man Holdings Ltd. Output was cut this season by rain caused by the La Nina weather pattern, associated with cooler-than-normal waters in the Pacific Ocean. A bag of coffee weighs 60 kilograms (132 pounds).

“It is very tight until April, and then once the new Indonesian crop arrives, there will be a reversal of this tightness,” Volcafe said in a report yesterday. “Vietnam is almost the lone supplier of volume robusta these last couple of months, until India, Uganda, Indonesia, Ivory Coast or even Brazil start to ship more volume come April and May.”

Robusta coffee for May delivery rose 1.3 percent to $2,035 a metric ton by 10:22 a.m. on NYSE Liffe in London. The price increased as much as 1.3 percent yesterday and fell the previous two sessions. Arabica coffee for May delivery was up 0.7 percent at $2.0465 a pound on ICE Futures U.S. in New York.

Options traders are already betting on higher prices. Investors held 6,190 contracts giving the right to buy robusta coffee at $2,050 a ton as of Feb. 28, up from 365 call options on Jan. 31, NYSE Liffe data shows. This was the most widely held call option, which gives the holder the right, but not the obligation to buy the futures.

Options Bets

Traders also held 4,895 calls giving the right to buy at $2,200, 4,175 contracts to buy at $2,100 and 3,925 contracts to buy at $2,400, the data show. That compares with 110 contracts, 930 contracts and 150 contracts respectively on Jan. 31, according to the exchange.

Robusta coffee climbed 12 percent so far this year after exports from Vietnam fell 48 percent in January, government data show. The rise in prices has prompted farmers to increase sales, Commerzbank AG said in a report Feb. 28.

Vietnamese coffee exports are forecast to rise 25 percent to 180,000 tons this month, the General Statistics Office said on Feb. 27.

White, or refined, sugar for May delivery was little changed at $652.30 a ton on NYSE Liffe. Raw sugar for May delivery slipped 0.2 percent to 24.95 cents a pound on ICE.

Cocoa for March delivery advanced 0.8 percent to 1,491 pounds ($2,278) a ton in London. Cocoa for May delivery was up 0.8 percent to $2,353 a ton in New York.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net


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