Robusta Coffee Gains as Liffe Stockpiles Drop 32%; Sugar Falls

Isis Almeida - Bloomberg -   Dec 13, 2013

Robusta coffee gained for a second day in London to the highest price in more than three months after bean stockpiles in exchange-tracked warehouses fell more than traders anticipated. Sugar dropped.

Bean inventories with a valid grading certificate slid 32 percent in the past two weeks to 31,420 metric tons as of Dec. 9, from 45,900 tons previously, NYSE Liffe data released after the market closed yesterday showed. That’s the lowest level since at least 2002. A Bloomberg survey of 10 traders in August showed they expected reserves to drop to 52,000 tons by the end of the year, potentially sending futures traded in London to as high as $2,000 a ton.

“The range of estimates were wide from anywhere between 400 to 1,000 lots over the fortnight,” Alex Parry, a broker at ABN Amro Clearing Bank NV, said by e-mail today. A lot is 10 tons. “This number is sizeably above the market expectation and should be supportive” to the price and the market structure.

Robusta coffee for March delivery rose 1.2 percent to $1,797 a ton by 10:48 a.m. on NYSE Liffe in London. It touched $1,804 earlier today, the highest for a most-active contract since Aug. 22. The January futures, which expire at the end of next month, were at $1,831 a ton.

Arabica coffee for delivery in March gained 1.2 percent to $1.126 a pound on ICE Futures U.S. in New York. Futures trading volumes were 8 percent higher than the average for the past 100 days at this time of day in New York, according to data compiled by Bloomberg.

Instant, Espresso

Robusta beans used to make instant coffee and espresso rallied 11 percent in November, the biggest monthly gain since 2011, on slow sales from leading producer Vietnam. Farmers in the southeast Asian nation sold 11 percent of their 1.7 million tons crop in the 2013-14 season, down from 18 percent in the same period a year earlier, a separate Bloomberg survey of 12 traders published yesterday showed.

Robusta for delivery in January was trading at a premium of $31 a ton to the March futures, up from $27 a ton a week earlier, exchange data on Bloomberg showed. The price difference between the two contracts reached $60 a ton on Dec. 9 and Dec. 10, a record since the spread started trading in 2012. A market structure in which prices of earlier-dated contracts are higher than deferred ones is called backwardation and may signal concern about supplies.

Cocoa for March delivery fell 0.1 percent to 1,767 pounds ($2,877) a ton on NYSE Liffe. The December contract expired yesterday at 1,732 pounds a ton and the delivery will be published today. In New York, cocoa for March delivery was little changed at $2,786 a ton on ICE Futures U.S.

Sucres et Denrees SA will deliver 33,060 tons of cocoa to settle the expiration of the December futures contract on NYSE Liffe, the Paris-based company said yesterday. The position has “served its purpose,” Derek Chambers, the head of cocoa at the company know as Sucden, said.

Refined, or white, sugar for March delivery fell 0.3 percent to $443.90 a ton in London. Raw sugar for March delivery was 0.1 percent lower at 16.28 cents a pound in New York.