Arabica-Coffee, Raw-Sugar Futures Slip on Profit-Taking

  NEW YORK  -  Arabica-coffee futures slipped Monday as traders took profits from this quarter's Brazil

drought-driven rally.

  Arabica beans for delivery in May on ICE Futures U.S. fell to $1.8880 a pound, the lowest since

March 5, but later pared some of the losses. The May contract was recently at $1.9330 a pound, down

2.6% or 5.1 cents.

  Prices dropped 3.7% in the previous session, signaling to some investors that it is time to

liquidate their positions, said Hernando de la Roche, a senior vice president at brokerage INTL

FCStone.

  Brazil's worst drought in decades propelled arabica-coffee prices to a more than two-year high of

$2.0975 a pound last week. Futures prices have gained 75% since the start of the year. Brazil is the

world's largest coffee producer and the source of about one-third of the world's annual output.

The dry weather has fueled worries about the size and quality of the country's crop this year.

  Some investors are likely taking profits as the first quarter winds down, said Sterling Smith, a

futures specialist at Citigroup. Prices could fall much lower if they settle below $1.80 a pound, he

said.

  Raw-sugar futures also fell, hitting the lowest point since Feb. 21. May-delivery sugar was down

1.4% at 17.01 cents a pound.

  Brazil is also the world's largest supplier of sugar, and the drought raised concerns about stress

to sugar cane ahead of the next harvest, which begins next month. Those concerns helped raw-sugar

futures reach a four-month high of 18.47 cents a pound on March 6. But recent rains and the ability

of growers to replant cane more easily than coffee trees have damped the rally.

"Funds are not as infatuated with (the raw-sugar market) as they used to be," Mr. Smith said.

  In other markets, May cocoa was up 0.1% at $2,994 a ton, while May cotton was down 0.6% at 91.68

cents a pound. Orange-juice futures for May were 0.2% lower at $1.4920 a pound.