Arabica Coffee Cracks $2 a Pound

Alexandra Wexler

     NEW YORK--Arabica-coffee prices extended their gains Wednesday, flirting with $2 a pound, as

traders and investors continued to worry about how Brazil's weather problems would affect the

country's crop.

     Futures are up 81% this year, after the worst drought in decades in Brazil--the source of about

half of the world's arabica beans--clipped output and raised worries over the size and quality of

next season's crop. But when unseasonable rains fell in July, some trees started to flower

prematurely. The rains were followed by more dry weather, which could force coffee trees to abort

the flowers and not produce cherries, the fruit that surrounds the seeds that are roasted to make

beans.

     Arabica coffee for delivery in December on ICE Futures U.S. was recently up 3.6% at $2.0030 a

pound, the highest intraday level since Sept. 5.

     "The weather in Brazil will turn dry until mid-next week, causing further jitters in a market

that sees trees deteriorating because of the drought," said Rodrigo Costa, head of the coffee desk

at brokerage Newedge in New York.

     Raw-sugar futures fell on the sole delivery day for the October contract. The delivery of

10,405 lots, equal to about 529,000 metric tons of sugar, was about half of what traders were

expecting two weeks ago, said Michael McDougall, senior vice president at Newedge.

"The lower delivery is still leaving sugar overhanging the market," Mr. McDougall said.

Raw sugar for delivery in March on ICE was recently down 2% at 16.13 cents a pound.

     In other markets, cocoa for December delivery was 3.3% lower at $3,190 a ton as traders and

investors booked profits from the market after it hit a 3 1/2 -year high last week.

December-delivery cotton edged 0.5% higher to 61.67 cents a pound after settling at a near-five year

low during the previous session. Orange juice for November delivery was 0.2% higher to $1.4510 a

pound.