ICE Arabica-Coffee Surge on Bargain Buying, Crop Concerns

  NEW YORK  -  Arabica-coffee futures jumped 4%, nearing bull-market territory, as traders rushed in to

buy one of the biggest losers of 2013 on new concerns over this year's supply.

  Arabica coffee for delivery in March settled at $1.21 a pound, the highest since Aug. 19, for the

most-actively traded contract.

Arabica-coffee prices are up 9.3%, or 10 cents, since the start of the year.

  In a report emailed Monday, Switzerland-based Volcafe Ltd., a unit of commodities trade house ED&F

Man Holdings Ltd., said it had lowered a previous forecast for Brazil's crop next year by 15% to 51

million 60-kilogram bags. That would create a global deficit of coffee beans in the 2014-15 crop

year, Vocafe said.

  The projected drop in Brazil's output, Volcafe, is due to poor flowering, the product of trees

stressed from two large crops as well as farmers' decisions to heavily prune their trees.

   Brazil is the source of around one-third of the world's coffee and the smaller-than-expected crop

could drive up prices for a market that dropped 23% last year. Brazil's back-to-back bumper crops

along with higher production in neighboring Colombia, the world's second-biggest arabica grower

after Brazil, helped send prices down to 7-year lows in November.

But some industry experts say traders are now looking ahead.

  "We had all the bearish news in (the) price," said Rodrigo Costa, director of trading at Caturra

Coffee Corp., an Elmsford, N.Y.-based coffee importer. "There really wasn't anything substantially

new to add into the bearish fold."

Some analysts say prices could move even higher.

  "We may be getting as little overheated near term, but we should be working generally higher,"

said Sterling Smith, a futures specialist at Citigroup. "$1.00 (a pound) is off the board."

  Arabica-coffee prices ended at $1.0150 a pound on Nov. 6, the lowest point in more than seven

years.

  Orange-juice concentrate futures also rose Monday, as a cold snap in top U.S. citrus producer

Florida sparked a surge in prices. Orange juice for March rose 2.8% to end at $1.4360 a pound, the

highest settlement since Dec. 18.

  Key citrus-growing areas in the state will likely experience below- or near-freezing temperatures

Monday and Monday night, according to the National Oceanic and Atmospheric Administration.

  Cold weather could further crimp supplies of oranges from Florida, where citrus-greening disease

has already ravaged many groves. Growers in the state are expected to reap a 121 million 90-pound

box crop in the season started in October, according to the U.S. Department of Agriculture. That

would be the smallest crop in 24 years.

  Cocoa futures for March delivery fell 1.2% to $2,667 a ton. Cotton for March gained 0.8% to settle

at 83.63 cents a pound.

Raw sugar ended unchanged at 16.08 cents a pound.