Bloomberg News

Arabica Coffee Rebounds as Investors May Buy; Cocoa Declines

February 20, 2013

Arabica coffee rebounded in New York on speculation prices fell too far as investors may buy futures after bets on lower prices rose to a record. Cocoa slid.

The beans favored by Starbucks Corp. fell as much as 1.9 percent yesterday. Supplies from top producer Brazil, Colombia and some African nations will be enough to compensate for losses caused by leaf rust disease in Central America, researcher F.O. Licht GmbH said in a report dated yesterday. Large and small speculators, excluding index funds, increased bets on lower prices to a record as of Feb. 12, U.S. Commodity Futures Trading Commission data compiled by Bloomberg showed.

“Arabica is rebounding because of short covering,” Edward de Wismes, an agricultural futures broker at Aurel BGC in Paris, said by e-mail today, referring to investors closing bets on prices falling further. “Prices should still come under pressure due to supplies from Brazil.”

Arabica coffee for delivery in May gained 0.8 percent to $1.395 a pound by 8:36 a.m. on ICE Futures U.S. in New York. Robusta coffee for delivery in May climbed 1 percent to $2,061 a metric ton on NYSE Liffe in London.

Arabica coffee fell 32 percent in the past 12-months, making it the worst performing commodity in the Standard & Poor’s gauge of 24 raw materials. Production in Colombia, the second-biggest arabica grower, may gain 30 percent to 10 million bags this year, according to the National Federation of Coffee Growers. Brazil may harvest 47 million to 50.2 million bags in 2013, which could be a record for a year in which trees enter the lower-yielding half of the cycle, the government estimates. A bag of coffee weights 132 pounds.

The price difference between arabica futures for delivery in March and for May narrowed by 51 percent over the past week, data on Bloomberg showed. Today is the first notice day for the March contract, when holders of futures must notify counterparties whether they intend to accept physical delivery.

Raw sugar for delivery in May advanced 0.2 percent to 18.01 cents a pound on ICE. White, or refined, sugar for May delivery rose 0.4 percent to $497.80 a ton on NYSE Liffe.

Cocoa for delivery in May fell 0.3 percent to $2,112 a ton in New York. Cocoa for delivery in March gained 0.3 percent to 1,402 pounds ($2,147) a ton in London.

To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.


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