Coffee Rises as Europe’s Stockpiles May Decline

Coffee rose in London on speculation European stockpiles will fall with supplies limited in Vietnam, the world’s largest producer of robusta beans. Sugar fell.
Robusta coffee inventories with valid grading certificates were 398,090 metric tons as of Aug. 22, down 1.6 percent from two weeks earlier, a third consecutive fall, NYSE Liffe figures on Aug. 25 showed. Arabica coffee prices in New York jumped 1.9 percent yesterday while the London market was closed.

“The tight supply in the robusta market due to lack of farmer selling is likely supporting the price,” Keith Flury, an analyst at Rabobank International in London, said in an e-mail today. “Robusta is also catching up with yesterday’s rise in the arabica market.”
Robusta coffee for November delivery climbed $9, or 0.4 percent, to $2,371 a ton by 10:18 a.m. on NYSE Liffe in London. Arabica coffee for December delivery fell 1.95 cents, or 0.7 percent, to $2.825 a pound on ICE Futures U.S. in New York. Arabica beans are grown mostly in Latin America and favored by specialty coffee shops.
High prices in Vietnam encouraged farmers to sell before now, leaving “very little supply at origin,” Rabobank said in a report on Aug. 26.
Global coffee production will need to rise by 20 million bags in the next 10 years, Santos-based broker Escritorio Carvalhaes said in a report e-mailed yesterday. “World stocks are dropping every year, while global consumption increases above two million bags yearly,” it said in the report.

Coffee and Cocoa

Coffee may outperform cocoa as production falls short of demand, tightening global supply, said Olam International Ltd. (OLAM), one of the world’s three biggest suppliers of both commodities.
“The difficulties in terms of adequate supply and declining stocks-consumption ratios will support coffee prices in the near term,” said Sunny Verghese, chief executive officer of Olam. He did not elaborate on the size of the expected shortfall.
White, or refined, sugar for October delivery dropped $12.80, or 1.6 percent, to $767.80 a ton in London. Raw sugar for October delivery fell 0.46 cent, or 1.5 percent, to 29.43 cents a pound in New York.
Brazil’s agriculture ministry’s crop-forecasting agency, known as Conab, will release its second estimate for this year’s sugar-cane crop in at 9 a.m. Brasilia time today.
Cocoa for December rose 11 pounds, or 0.6 percent, to 1,950 pounds ($3,187) a ton on NYSE Liffe. Cocoa for December delivery fell $18, or 0.6 percent, to $3,117 a ton on ICE.
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.