Arabica Coffee Tumbles as Traders Take Profits After Rally

  NEW YORK  -  Coffee prices dropped Thursday, snapping the longest winning streak in more than two

years, as traders locked in profits from a weather-fueled rally.

  Arabica coffee for delivery in March on ICE Futures U.S. settled at $1.3575 a pound, falling 5.1%,

the biggest one-day percentage drop for the most actively traded contract since July 24, 2012.

  "What we have here is simple profit-taking," said Sterling Smith, a futures specialist at

Citigroup, referring to Thursday's move. "Volatility is the name of the game."

The consecutive days of gains was the longest since an eight-day streak ended Sept. 1, 2011.

  Arabica-coffee futures rose 22% in the week ended Wednesday, as abnormally hot and dry weather in

top coffee grower Brazil raised alarms over damage to next season's crop.

  In Brazil, coffee trees have begun to produce cherries, the fruit that contains the beans that are

roasted before they reach supermarket shelves. But the fruit is still immature and requires moisture

to ripen. Growers will start picking the crop in late April or early May.

  The dry weather and above-normal temperatures in Brazil's coffee belt is likely to continue over

the next five days, which could deplete soil moisture and cause production losses, weather

forecaster DTN said.

  The lack of rain is also a concern for sugar production. Brazil is the source of about one-fifth

of the world's sugar, and dry weather could limit how much sugar the cane there produces. Futures

prices rose 9.2% over the five previous sessions on supply concerns but fell 1.6% Thursday. Raw

sugar for March delivery ended at 15.85 cents a pound.

  Cocoa futures ended up $2 at $2,886 a ton. Stockpiles of cocoa beans in warehouses licensed by the

ICE exchange fell to a one-month low, a sign of demand for the key chocolate ingredient.

  Cotton for March ended up 0.9% at 86.31 cents a pound, while March-delivery orange-juice

concentrate fell 0.2% to end at $1.4545 a pound.