Arabica Coffee Ends at High of More Than 3 Weeks; Other Softs Fall

Leslie Josephs

  NEW YORK--Arabica-coffee futures on Monday settled at the highest level in more than three weeks

on renewed concerns about whether global demand for the beverage would outpace bean production.

  Arabica coffee for delivery in September gained 1.1% to $1.7740 a pound, the highest settlement

for the most actively traded contract since May 30. July coffee ended 1.1% higher at $1.7510 a

pound.

  "The market continues to be nervous about crop size," said Sterling Smith, a futures specialist at

Citigroup.

  The worst drought in decades is expected to hurt coffee production in Brazil this year, according

to the estimates of government and some trade houses. Brazil is the world's biggest coffee grower

and the source of about one-third of the world's supply.

  While estimates have varied widely, growers there started picking coffee cherries about two months

ago, so new estimates will be based on what is actually coming off the trees, and be more accurate,

Mr. Smith said.

"The picture is just starting to get focused around the edges," he said.

  Brazil's poor growing weather will likely mean crimped supplies next year, the U.S. Department of

Agriculture said in a report published Friday.

  Global coffee supplies are likely to fall by 1.5 million 60-kilogram (132-pound) bags from the

previous season to 148.7 million bags in the 2014-15 season, which starts in October, the USDA

report said.

  In other markets, cotton for delivery in July dropped by 4 cents -- the exchange-permitted daily

limit -- shortly before the end of trading. But the trades occurred after the settlement window of

2:14-2:15 p.m. EDT, so the July cotton contract finished the day down only 0.7% at 87.52 cents a

pound.

  Traders said the drop could be linked to investors trying to get out of the contract before first

notice day on Tuesday. The notice period is when buyers and sellers post notices on their plans to

take or make delivery of cotton for the month. Volume generally thins in that period, so many

traders averse to potentially brusque market moves exit their positions.

  "They were late -- they were out of time," said Sharon Johnson, a senior cotton specialist and

introducing broker at KCG Futures in Atlanta.

  Raw sugar for July settled 0.4% lower at 17.85 cents a pound. The October contract for raw sugar

ended at 18.71 cents a pound, down 0.2% on the day.

  That was despite an announcement from the government of No. 1 sugar consumer India that it will

more than double its import duty on the sweetener to 40%, hoping to slow the flow of inexpensive

imports into its market. That would also leave some sugar on the global market. India's Food

Minister Ram Vilas Paswan said Monday that the import duty will be ratcheted up from 15% so that the

country's refiners--who are forced to buy sugar cane at high, government-set prices--can compete

with sugar imports. He didn't say when the new higher tariff would take effect. Even though there is

a glut of local sugar in India, traders have imported about 200,000 tons since October because

imports are less expensive than local sugar.

  Orange-juice concentrate for July delivery ended 0.4% lower at $1.5750 a pound, while the

September contract settled at $1.6140 a pound, down 0.2% on the day. Cocoa for September delivery

fell 0.9% to end at $3,080 a ton.