Arabica coffee may rise as much as 24 percent on low stockpiles and a production shortfall in Colombia, according to a fund manager at Vontobel Asset Management Inc.
Arabica coffee has fallen 22 percent in New York so far this year as traders sold the beans in anticipation of a record crop in Brazil, the biggest grower. Coffee production in Colombia, the second-largest supplier of arabica beans after Brazil, shrank 41 percent in January from a year earlier after storms last year increased disease and damaged plants.
“Coffee looks quite interesting,” Jeremy Baker, the manager of Harcourt’s $925-million Belvista Commodity Fund, part of the Vontobel Group, said in a phone interview today. Vontobel Group oversees $50.5 billion of assets. “If you look at the arabica market, inventories from the stocks-to-consumption perspective are pretty low. There are still issues in Colombia.”
Arabica coffee for May delivery was up 0.3 percent to $1.774 a pound by 11:38 a.m. on ICE Futures U.S. in New York. The price touched $1.7445 a pound yesterday, the lowest since October 2010. The beans may rise to $2.10 to $2.20 a pound in the second quarter, Zurich-based Baker said.
Cocoa may gain to $2,620 to $2,650 a metric ton in New York, Baker said. Raw sugar will trade between 22.50 cents and 30 cents a pound next quarter, he said.
Arabica beans are grown mainly in Latin America and favored by companies such as Starbucks Corp. (SBUX) for specialty beverages. The 2012-13 crop in Brazil may be a record 49 million to 52.3 million bags as trees enter the higher yielding half of a two- year cycle, the government estimates. While the 2012-13 season starts in October in most countries, Brazil’s harvest usually begins in July.
Production in Colombia slid to 535,000 bags in January from 908,000 bags of 60 kilograms (132 pounds) a year earlier, data published by Colombia’s National Federation of Coffee Growers showed last month.
Inventories (CSCITLTL) of arabica beans in warehouses monitored by ICE rose 22 percent to 1.55 million bags since falling in October to the lowest level since 2000.
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