Cotton, Raw Sugar and Arabica Coffee Rebound

Alexandra Wexler

  NEW YORK--Cotton, raw-sugar and arabica coffee prices recovered from slumps during the previous

session, climbing Wednesday as traders and investors saw opportunities to buy.

  Cotton futures fell 1.6% Tuesday after the U.S. Department of Agriculture's revised estimate for

production trounced market expectations for a second consecutive month. Federal forecasters

increased their estimate for U.S. cotton production to the highest in four years, up 6.1% from the

previous report to 17.5 million 480-pound bales during the season that began Aug. 1.

  Cotton for delivery in December on the ICE Futures U.S. exchange was recently up 1% at 63.99 cents

a pound, near the level before the report's release during the previous session.

  "How quickly inventory builds will drive prices, which may or may not be offset by stronger mill

demand and talk of lower cotton planted area in 2015," said Sharon Johnson, senior cotton specialist

and introducing broker for KCG Futures in Atlanta. "There are considerable headwinds for cotton and

the picture is bearish, but weather will have the final word."

  Higher production of the fiber is expected to lead to more cotton left over in U.S. warehouses at

the end of the 2014-15 season. The USDA projects 5.6 million bales of ending stocks, the highest in

six years, and more than double the amount of the fiber left over from the season that ended July

31.

  Raw sugar for October delivery was recently up 0.8% at 16.17 cents a pound, up from Tuesday's tie

of a six-month low settlement from last week.

  The sugar harvest in Brazil, the top grower and exporter, slowed at the end of last month. Mills

in the center-south region, where 90% of Brazil's crop is grown, crushed nearly 36 million metric

tons of cane in the period, down 19% from a year earlier. Sugar output dropped 12% to 2.2 million

tons in the second half of July from a year earlier, industry group Unica said.

  "Yields figures for the second half of the season are certain to be worse, not better, because the

most stressed and least developed cane of the harvesting cycle will comprise virtually all of the

volume that will be crushed," said Phil Pia, a broker at Newedge in New York. "The probability is

increasing that the present crushing season ends abruptly sometime in the middle of October, that

is, about one month earlier than normal."

  Thus far, however, mills have processed more cane than last year, with center-south mills crushing

280.4 million tons of cane, up 3.8%, and producing 15.1 million tons of sugar, up 8.8% from a year

ago, according to Unica.

  Arabica coffee for delivery in September was up 1.5% at $1.8730 a pound as that market continued

to stabilize after a pop above $2 a pound earlier this month.

  Brazil's worst drought in decades earlier this year also stunted the growth of coffee cherries,

which contain the seeds that are roasted and ground before they are brewed to make the beverage. The

extremely dry weather in Brazil, the source of one-third of the world's coffee beans, also hurt

trees' development for next year's harvest, according to some forecasts. That is keeping futures for

the beans supported.

  Orange juice for September delivery was recently 0.3% lower at $1.4350, while December-delivery

cocoa was down 0.5% at $3,222 a ton.