Arabica Coffee Slumps in More Profit-Taking; Cotton Slips

  NEW YORK  -  Coffee prices retreated Monday, extending the previous session's losses as investors

continued to book profits from the market's 26-month highs last week.

  Arabica coffee for delivery in July was recently 1.6% lower at $2.0365 a pound on the ICE Futures

U.S. exchange.

  Prices have nearly doubled this year on concerns that supplies out of Brazil, the world's largest

coffee grower and exporter, would be limited by dry weather. Brazil experienced its worst drought in

decades during January and February, key months for the coffee crop's development. But some

investors have begun to take profits as the harvest ramps up.

  "What we're seeing here today is a little more long liquidation and profit-taking in this market

after we saw that big run up last week," said Boyd Cruel, senior analyst at Vision Financial Markets

in Chicago. "During the first or second week of May we'll have a better picture of the extent of the

damage to the current crop."

  Brazil's National Coffee Council estimates the harvest will be 10% smaller than the previous one,

and last week, Volcafe Ltd., a unit of commodities trade house ED&F Man Holdings Ltd., reduced its

forecast by 11%.

  Dry weather stunts the growth of coffee cherries, which contains the seeds that are roasted to

make coffee beans.

  "The beans they've been picking (in Brazil) have just been a lot smaller" than usual, Mr. Cruel

said.

  Cotton futures also eased, under pressure as high U.S. prices push foreign buyers to look

elsewhere for their fiber needs.

  "We do not expect the cotton price to remain at such a high level, since the currently very low

U.S. stockpiles should rise appreciably in the new crop year, in view of a significantly larger U.S.

crop and lower Chinese imports," Commerzbank said in a note. "We...stand by our price forecast of 74

U.S. cents per pound for Q4 2014."

Cotton for delivery in July on ICE was recently 0.5% lower at 92.76 cents a pound.

  In other markets, raw sugar for delivery in July was 0.8% lower at 17.71 cents a pound, and cocoa

for July delivery was up 0.2% at $2,959 a ton. July orange juice was down 0.4% at $1.6435 a pound.