SF: Coffee Rises to 13-Year High on Brazil, Colombia Crop Concern
Oct. 21 (Bloomberg) -- Arabica coffee rose to a 13-year high in New York on concern that output may fall next year in Brazil and Colombia, the world's two biggest growers of the variety. Robusta coffee reached a two-year high in London.
Brazilian coffee output may fall next year as trees enter the lower-yielding half of a two-year cycle, the Agriculture Ministry said Sept. 9. Colombia said Oct. 15 a fungus that damages plants may reduce output next year, a day after growers cut the forecast for this year's harvest.
"There are still big concerns" for South American crops, said Kona Haque, a London-based analyst at Macquarie Group Ltd. "Every time you hear of any supply downgrade or production disruption, that's what's causing prices to shoot up even more, because there's just no room for error. It's going to remain a volatile market."
Arabica for December delivery rose 4.95 cents, or 2.5 percent, to $2.017 a pound on ICE Futures U.S. at 11:27 a.m. London time. Prices reached $2.0315, the highest intraday level since Aug. 11, 1997.
Haque also pointed to reduced bean inventories. Coffee stockpiles monitored by the New York Board of Trade came to 1.84 million bags as of Oct. 19, down 40 percent this year.
Robusta gained as the government of Vietnam, the world's biggest producer of the variety, said floods and heavy rain in central provinces left 54 people dead, 44 injured and 20 missing. Typhoon Megi, which left 19 people dead in the Philippines, moved into the South China Sea as it headed for the Chinese coast.
Exports From Vietnam
"A lot of people are seeing potential for lower Vietnamese exports," said Doug Whitehead, an analyst at Rabobank International in London. "The super-typhoon Megi could also be inducing some pre-emptive buying in robusta."
Robusta for January delivery jumped $58, or 3.2 percent, to $1,898 a metric ton on NYSE Liffe. Prices reached $1,910, the highest level since Oct. 14, 2008.
"Concern over delays to the new crop should rainfall persist" helped to lift prices, along with the typhoon, Ralph Hawes, a coffee trader with Sucden Financial Ltd. in London, wrote in a note yesterday.
Robusta, used in instant coffee, is harvested mostly in Asia and parts of Africa. Arabica, grown mainly in Latin America, is favored for specialty beverages made by Starbucks Corp. and other coffee chains.
White, or refined, sugar for December delivery fell 0.2 percent to $729.10 a ton in London. Raw sugar for March delivery gained 0.5 percent to 28.95 cents a pound on ICE Futures U.S. in New York.
Cocoa for December delivery climbed 1 percent to 1,879 pounds ($2,962) a ton in London. The chocolate ingredient for December delivery rose 0.3 percent to $2,784 a ton in New York.
--With assistance from Stuart Biggs in Tokyo and Stephanie Tong in Hong Kong. Editors: Dan Weeks, John Deane.
