Arabica Coffee, Raw Sugar Tumble in Profit-Taking

Alexandra Wexler

  NEW YORK--Arabica-coffee futures dropped Friday morning as investors locked in profits, sending

the market below the important technical and psychological level of $2 a pound.

  The worst drought in decades in top coffee grower and exporter Brazil has pushed the market up 86%

since the start of 2014 and to a two-year high settlement on Thursday, as growers and analysts have

slashed their forecasts for the upcoming harvest.

  Arabica coffee for delivery in May on the ICE Futures U.S. exchange was recently 4.1% lower at

$1.9760 a pound.

  "This is just profit taking," said Thiago Cazarini, the founder of coffee brokerage Cazarini

Trading Company, based in Varginha, Brazil. "For the moment, it needed a correction."

  Raw-sugar futures also retreated, with the contract for delivery in May recently down 3.4% at

17.25 cents a pound. Brazil is also the world's top sugar grower and exporter, and the drought has

delayed cane planting, which is usually done at the beginning of the year.

  "Recent rains in Brazil have allowed some of the areas to catch up on the planting that they were

unable to do during the dry period," said James Cassidy, head of the sugar desk at brokerage Newedge

in New York.

  The slide in sugar prices could "progress next week if we don't have any news over the weekend,"

Mr. Cassidy said.

  Cotton futures also slipped, with the contract for May delivery down 0.9% at 90.90 cents a pound

as buyers remained on the sidelines due to the recent rally. Cotton prices are up 8.3% this year.

"I think cotton's overpriced," said Joe Ricupero, vice president at RJO Futures in New York.

  Cotton futures briefly popped to a near one-year high Thursday on news that foreign buyers had

continued to purchase the fiber despite prices above 90 cents during the week ended March 6.

  In other markets, cocoa for delivery in May was recently 0.4% higher at $3,017 a ton and orange

juice for May delivery was 0.7% lower at $1.4985 a pound.