Robusta Coffee Climbs to Four-Month High on Vietnam; Sugar Gains

11/02/2013
 
Robusta Coffee Climbs to Four-Month High on Vietnam; Sugar Gains
BLOOMBERG (USA)
 
Robusta coffee, used in instant drinks and espresso, climbed to the highest level in more than four months in London as selling from Vietnam, the variety’s biggest grower, slowed ahead of the Lunar New Year. Sugar rose.

Vietnamese farmers, who have been holding back beans looking for higher prices, may increase “retention” after Tet, the festival that celebrates the Lunar New Year, Volcafe, the coffee unit of commodities trader ED&F Man Holdings Ltd., said in a report e-mailed Jan. 25. Sales prior to the holidays, which start this weekend and run through Feb. 17, were about 40 percent of the 2012-13 crop compared with 45 percent a year earlier, the median estimate in a Bloomberg survey of eight traders and shippers published on Feb. 1 showed.

“The principal hedging origin, Vietnam, is now heading into holiday season,” London-based broker ABN Amro Markets U.K. Ltd. said in a report e-mailed today. “This does not completely remove selling but means it may be more sporadic over the next week or so.”

Robusta coffee for delivery in March climbed 1.2 percent to $2,123 a metric ton by 12:43 p.m. on NYSE Liffe in London. The price touched $2,145 a ton, the highest since Oct. 5. Arabica coffee for delivery in March gained 0.4 percent to $1.408 a pound on ICE Futures U.S. in New York. Earlier, it touched $1.394 a pound, the lowest since June 2010. Trading of arabica was more than double the average volume of the past 100 days at this time, according to data on Bloomberg.

Robusta coffee for March delivery was $12 a ton more expensive than the beans from May, reversing a discount of $10 a ton in the first trading day of the week. That structure, where nearby contracts are valued higher than later-dated ones, is called backwardation and may signal tight supplies.

Stockpiles of robusta coffee in warehouses monitored by Liffe fell 3 percent to 102,410 tons by Feb. 4 from two weeks earlier, exchange data yesterday showed. Inventories are down 75 percent from an all-time high of 417,420 tons in July 2011.

Arabica coffee, favored by Starbucks Corp., is fetching the smallest premium over robusta in almost four years as reserves in ICE-monitored warehouses stood at 2.6 million bags yesterday, the highest since 2010. The premium touched 43.295 cents a pound, the lowest since March 17, 2009. A bag of coffee usually weighs 60 kilograms (132 pounds).

White, or refined, sugar for May delivery was down 0.4 percent at $495 a ton on NYSE Liffe. Raw sugar for delivery in March gained 0.1 percent to 18.18 cents a pound on ICE.

Cocoa for delivery in March fell 0.5 percent to 1,450 pounds ($2,289) a ton in London. Cocoa for delivery in May was little changed at $2,233 a ton in New York.