Coffee Market Braces for Venti Bags

Leslie Josephs

  For hundreds of years, coffee beans have made their way around the world in

gunny sacks.

  Now the use of these burlap bags, small enough to be hoisted by one person

and a symbol of coffee's artisanal character, is giving way to the modern

demands of global trade.

  IntercontinentalExchange Inc. (ICE), home to the world's most heavily traded

coffee contract, last week said it would allow bean shipments to its certified

warehouses to arrive in lined cargo containers, or "supersacks." These plastic

woven sacks often hold a metric ton of coffee, or enough beans to make about

125,000 shots of espresso.

  The move is expected to make it easier for big commodity traders and food

companies to buy and sell coffee on the exchange. Cargo containers of loose

beans already change hands in the physical-coffee market. But to be delivered

against the ICE futures contract, arabica coffee beans generally must have

arrived in the warehouse in bags that were marked at the beans' origin, and be

made of "sisal, henequen, jute, burlap or woven material having similar

properties," according to current rules.

  At the same time, the loosening of packaging requirements could further

suppress prices that already are weighed down by a glut of arabica beans, the

variety used by roasters such as Starbucks Corp. (SBUX) and Italy's IllyCaffe

SpA, traders and analysts say.

  The new rule "is going to increase the amount available [in stockpiles],"

said Jack Scoville, a vice president at brokerage Price Futures Group in

Chicago. That likely would pressure prices even more, Mr. Scoville added.

  Stockpiles of arabica are near 3-1/2-year highs, caused largely by

back-to-back record harvests in No. 1 grower Brazil. The glut has driven prices

of arabica to their lowest levels since April 2009. Arabica futures rose 0.2%

to $1.1525 a pound on the ICE Futures U.S. exchange Wednesday.

  Some market experts say that big incoming coffee shipments also could revive

worries about the quality of the beans in ICE-certified warehouses, which could

suppress futures prices relative to prices on the cash market. ICE tightened

standards in late 2010 in response to concerns about the age, color and taste

of coffee beans in storage amid a shortage of beans from Colombia, the world's

No. 2 arabica grower.

  Many companies, from small Brooklyn, N.Y., roasters to Starbucks, have a

policy of only using coffee beans that have traveled from the farm to roasting

machines in gunny sacks.

  Cheryl Kingan, head coffee buyer for Cafe Grumpy, a small roaster in

Brooklyn, says she doesn't receive coffee in a lined container.

  "You wouldn't know exactly what you're getting," Ms. Kingan says.

  Critics of the new rule, which comes into force in late 2015, say it is more

difficult to ensure that coffee beans originated from the country advertised if

they are shipped in bulk and then rebagged. Certain beans, like those from

Colombia, command a premium while the more plentiful, mechanically harvested

Brazilian beans are traded at a discount to the benchmark futures contract.

  "I'd rather see [the coffee] arrive in bags," says Bob Phillips, a trader at

Caturra Coffee Corp., a coffee importer based in Elmsford, N.Y. Referring to

ICE's rule change, Mr. Phillips said, "I don't think it's a wise idea because

someone will find a way to misrepresent [the coffee]. Beans don't have a stamp

on them."

  ICE says the decision will help bring it into line with a growing trend of

big, bulk deliveries of beans. Global coffee exports rose by 27% between 2002

and 2012, to 113.2 million bags, according to the International Coffee

Organization.

  Other coffee traders are defending the change.

  "It's really just reflecting what is going on in the physical [trading]

world," said a person involved in the decision-making process. "Welcome to the

'90s."

  J.M. Smucker Co. (SJM), the maker of Folgers, and Kraft Foods Group Inc.

(KRFT), which produces Maxwell House coffee, say they receive coffee shipments

in big containers.

  Even traders of some of the world's most sought-after coffee say worries

about quality are overblown. Companies that take coffee that meets the

exchange's minimum standards don't have particularly high expectations, says

Andi Trindle Mersch, a trader at Atlantic Specialty Coffee.

  "Supersacks are quite acceptable for quality as far as I know," Ms. Mersch

says, adding that only about 5% of the coffee the company buys comes in large

supersacks. Atlantic Specialty Coffee is a unit of Ecom Agroindustrial Corp.,

one of the world's biggest coffee traders.

  While the exchange is expanding the options to bring coffee to the warehouse,

ICE isn't changing how buyers can get it out. Under the new system, warehouse

employees still will sort and bag the coffee in natural-fiber bags before

handing it to the exchange's graders. The coffee still must pass the exchange's

muster before it joins the certified stockpiles.

  Still, many in the coffee market believe the really good beans always travel

in small packages.

  Costa Rica, which is famed for its coffee beans nourished by volcanic,

mineral-rich soil, exports 90% of its crop in smaller bags, said Edgar Rojas,

the deputy director of the Coffee Institute of Costa Rica, a government body

that oversees the industry.

  The bulk shipments "are cheaper" but smaller bags make "it easier to control

the quality," Mr. Rojas says.

  For the same reason, Starbucks says it only uses gunny sacks.

  "Starbucks only receives its coffee in unit-level bags," said Starbucks

spokeswoman Alisha Damodaran, referring to the industry standard bag that holds

60 kilograms, about 132 pounds. "It is an integral component to traceability

and quality assurance."

Orange-Juice Futures Ease; Arabica Coffee Near Flat

  NEW YORK--Orange-juice futures eased Wednesday morning as traders took

profits after the market gained 1.1% during the previous session.

  Futures remained range-bound between $1.25 and $1.30 a pound for a sixth

session as the market waited for fresh fundamental news.

  "We're expecting prices to stay within this range until we get some weather

news or once we get that crop production number" from the U.S. Department of

Agriculture, said Boyd Cruel, senior analyst at Vision Financial Markets in

Chicago. The USDA was scheduled to release its first orange production forecast

of the season on Friday, but the partial government shutdown is expected to

delay that report indefinitely.

  Orange juice for November delivery on the ICE Futures U.S. exchange was

recently 0.5% lower at $1.2860 a pound.

  During hurricane season, which runs from June 1 to Nov. 30, traders often

place bets that a storm could damage the groves and lower output in Florida,

the No. 1 U.S. orange-growing state. But the only weather disturbance in the

Atlantic is sitting off the coast of Africa, far from the shores of Florida.

The low-pressure area has a 30% chance of forming tropical cyclones in the next

48 hours, according to the National Oceanic and Atmospheric Administration.

  "Just a lack of news right now is why we're going to see this market trade

sideways," Mr. Cruel said.

  Arabica coffee for December delivery on ICE was recently 0.1% lower at

$1.1495 a pound.

  "Traders remain bearish overall on coffee prices due to big supplies

available and only light demand," said Jack Scoville, vice president at Price

Futures Group in Chicago.

  Global supplies of coffee beans have swelled thanks to back-to-back bumper

crops from Brazil, the source of one-third of the world's coffee, and

recovering production from neighboring Colombia.

Cotton Slides to Near-Five-Week Low on Lack of News

Alexandra Wexler

  NEW YORK - Cotton futures fell Wednesday to their lowest settlement since

Sept. 5 as a lack of fresh weather news and government data left the market to

drift lower.

  Traders had worried last week that Tropical Storm Karen would dump rains on

fields in No. 2 cotton-producing state Georgia and damage yields. But cotton

futures tumbled 3.6% Monday after rains in the Southeastern portion of the U.S.

didn't do significant damage to fiber still in the field.

  In addition, since the partial U.S. government shutdown began Oct. 1, the

U.S. Department of Agriculture has not released closely watched reports on U.S.

cotton export sales or the progress and condition of the U.S. crop. A key

monthly supply-and-demand report, which had been scheduled for release Friday,

is also expected to be delayed. Traders say the market is ripe for a squeeze in

the December contract because of the lack of government oversight.

  Open interest--or the number of outstanding positions--in the December cotton

contract has dropped by 4% this week as prices have hit near five-week lows.

Cotton for delivery in December on the ICE Futures U.S. exchange ended 0.6%

lower at 83.20 cents a pound on Wednesday.

  "It could make the (exchange) the cheapest place to buy cotton," said Chris

Kramedjian, a risk-management consultant at brokerage INTL FCStone. "Without

the government oversight, it's easier to build that position."

  Cocoa for December delivery eased from a 23-month high to settle at $2,703 a

ton, down 0.6% on the day.

  Prices have surged as rains in West Africa, a region that produces about 70%

of the world's cocoa, delayed the shipment of cocoa beans to ports, traders and

analysts said. And that rain isn't expected to reverse the effects of dry

weather in July and August, when the main crop was developing, market

participants added. As a result, the beans being harvested may be of lower

quality or fewer in quantity.

   Raw sugar for March delivery settled 0.2% lower at 18.59 cents a pound, down

from a near-seven-month high settlement on Tuesday as the market consolidated.

  Concerns about supplies in Brazil, the top producer of the sweetener, have

been buoying the market as heavy rains disrupt harvesting during the tail-end

of the sugar-cane crop.

  Arabica coffee for December delivery ticked 0.2% higher to $1.1525 a pound,

while orange juice for delivery in November closed 0.5% lower at $1.2850 a

pound in thin trade.

Café na ICE tem novo dia de lentidão e preços dentro de intervalo

  Os contratos futuros de café arábica negociados na ICE Futures US encerraram esta terça-feira com altas ligeiras, com, mais uma vez, o dezembro flutuando ao redor do nível de 115,00 centavos. Ao longo da manhã, a primeira posição chegou esboçar o rompimento dessa resistência, sem ter sucesso. No entanto, na segunda metade do pregão tal patamar conseguiu ser ultrapassado, sem, contudo, existir forças suficientes para que alguns stops de compra pudessem ser observados. Diante disso, o tom letárgico continuou a ser observado no segmento cafeeiro, com poucos negócios efetivamente sendo realizados e com os preços ficando presos em um range estreito, ao redor de um referencial psicológico.

Operadores destacaram as projeções apresentadas pela empresa Melitta em um evento realizado no Brasil. Segundo os executivos da companhia multinacional, a tendência do mercado de café é baixista e os preços tendem a se manter pressionados, próximos dos menores patamares em anos, por cerca de 15 a 20 meses. Nas mesas de comercialização alguns players comungam dessa opinião da torrefadora, com vários deles lembrando que o cenário atual é marcado por um volume alto de café disponível, fruto de safras consistentes do Brasil, do Vietnã e da recuperação da Colômbia, sendo que mesmo a quebra dos centro-americanos não será suficiente para mudar o cenário de disponibilidade ampla.

No encerramento do dia em Nova Iorque, a posição dezembro teve alta de 55 pontos, com 115,05 centavos de dólar por libra peso, com a máxima em 115,35 centavos e a mínima de 113,85 centavos, com o março registrando valorização de 55 pontos, com 118,20 centavos por libra, com a máxima em 118,40 centavos e a mínima em 117,00 centavos. Na Euronext/Liffe, em Londres, a posição novembro teve queda de 13 dólares, com 1.696 dólares por tonelada, com o janeiro tendo retração de 17 dólares, para o nível de 1.687 dólares por tonelada.

De acordo com analistas internacionais, o dia foi marcado pela pressão externa, devido ao impasse político nos Estados Unidos, que eleva a uma paralisação econômica por conta da não aprovação do orçamento. Esse quadro ainda atinge apenas lateralmente segmentos mais voláteis, como o de commodities, mas já derruba francamente outros mercados, como é o caso das bolsas de valores no país norte-americano.

Os investidores continuam preocupados com as incertezas associadas a esse impasse e alguns analistas avaliam que o cenário de baixa tendo a se acentuar caso uma solução não seja encontrada rapidamente.

"Enquanto continuamos a observar essa paralisação da economia norte-americana, o café se mostra pouco animador em novidades. O que temos é um ritmo lento de negócios e com os compradores se mostrando reticentes, apenas se acomodando em intervalos básicos, como é o nível de 115,00 centavos por libra, no atual momento. Evidentemente, com a pressão sobre mercados externos, como as bolsas, alguns respingos vão incidir sobre as commodities", disse um trader.

Nesta terça, o dólar teve uma ligeira alta em relação a várias moedas internacionais, ao passo que ficou estável em relação ao real brasileiro. No segmento de softs, o café teve alta e foi acompanhado pelo cacau, açúcar e suco de laranja.

O leilão de contratos de opção de venda de café, encerrado nesta terça-feira, negociou 100% da oferta 4.058 contratos, os quais não foram comercializados nos três leilões anteriores, realizados pela Companhia Nacional de Abastecimento. O prêmio a ser pago pelos produtores ficou em R$ 1,8400 por saca, o que representa um ágio de 7,3%, em comparação com o valor de abertura, que era de R$ 1,7150 por saca. O prêmio pago pelo cafeicultor garante o direito de vender o produto ao governo no vencimento dos contratos, em março de 2014, caso o preço de mercado esteja abaixo do valor de referência, que foi estabelecido em R$ 343 a saca. Atualmente, a saca de café, tipo exportação, similar ao exigido pelo governo nas opções, está cotada em cerca de R$ 260/R$ 270.

Os estoques certificados de café na bolsa de Nova Iorque tiveram queda de 750 sacas, indo para 2.760.292 sacas. O volume negociado no dia na ICE Futures US foi estimado em 9.640 lotes, com as opções tendo 2.224 calls e 950 puts — floor mais eletrônico. Tecnicamente, o dezembro na ICE Futures US tem resistência em 115,35, 115,50, 116,00, 116,20, 116,50, 117,00, 117,45-117,50, 118,00, 118,50, 119,00, 119,20, 119,50, 119,90-120,00, 120,50, 120,75, 121,00-121,05, 121,10, 121,50, 122,00, 122,50, 122,20 e 122,50 centavos de dólar, com o suporte em 113,85, 113,50, 113,00, 112,50, 112,00, 111,50, 111,00, 110,50, 110,10-110,00, 109,50, 109,00, 108,50, 108,00, 107,50 e 107,00 centavos.

Londres tem dia de queda e fica abaixo do nível de US$ 1.700

  Os contratos futuros de café robusta negociados na Euronext/Liffe encerraram esta terça-feira com quedas, com o novembro voltando a se posicionar abaixo do nível psicológico de 1.700 dólares. A sessão foi calma e sem maiores atrativos, com o volume comercializado, ao final das negociações, ficando dentro da média recente da bolsa londrina.

De acordo com analistas internacionais, as oscilações observadas ao longo do dia estiveram atreladas, basicamente, a ações técnicas. Apesar do fator "Vietnã" continuar sendo o principal item da pauta dos players, o que se observa é que ainda não há efetivamente um posicionamento mais claro dos terminais sobre a safra do país. Enquanto a expectativa dos operadores é de que os vietnamita colocarão um volume considerável de café no mercado, outros participantes temem que as fortes chuvas que atingem o país possam afetar a secagem do grão e também a qualidade final do produto.

"Alguns acreditam que a safra do Vietnã está precificada, mas isso é algo muito precipitado. Temos de ter ideia do tamanho da produção do país e também avaliarmos a questão da qualidade. A tendência é que essa nova produção pressione ainda mais os preços, uma vez que, ao contrário do que se pensava há alguns meses, as lavouras do país conseguiram, sim, ter um volume considerável de produção", disse um trader.

O novembro teve uma movimentação ao longo do dia de 5,66 mil contratos, contra 2,82 mil do janeiro. O spread entre as posições novembro e janeiro ficou em 9 dólares. No encerramento do dia, o novembro teve queda de 13 dólares, com 1.696 dólares por tonelada, com o janeiro tendo retração de 17 dólares, para o nível de 1.687 dólares por tonelada.

Arabica-Coffee Futures Still Under Pressure From Big Supplies

  NEW YORK  -  Arabica futures eased Tuesday morning as massive supplies of coffee

continued to weigh on the market.

  "All the fundamentals are still bearish -- it's not indicating that this

(market) is going to recover anytime soon," said Andre Santos, a trader at Ally

Brazilian Coffee Merchants in Plantation, Fla.

  Global supplies of coffee beans have swelled thanks to back-to-back bumper

crops from Brazil, the source of one-third of the world's coffee, and

recovering production from neighboring Colombia.

  Arabica coffee for December delivery on the ICE Futures U.S. exchange was

recently 0.4% lower at $1.1400 a pound in thin volume trade.

  "It's a sideways market right now," Mr. Santos said, but futures could touch

$1 a pound before the market finds a bottom, he added.

  Also, Colombians have become much more aggressive sellers of their coffee

over the last two months, Mr. Santos said, which is adding pressure to prices.

  The premiums paid for Colombian coffee "have come down significantly," he

said. "They just want to move, move, move" to make room for the new crop, which

producers will start harvesting soon.

Cocoa Futures Remain at 23-Month High on Supply Concerns

  NEW YORK - Cocoa futures rose to their highest price in nearly two years

Tuesday as traders bet that weather in West Africa would continue to interfere

with supplies.

  Heavy rains in the region are "slowing the shipment of a lot of cocoa into

the ports," said Fain Shaffer, president of Indianapolis-based brokerage

Infinity Trading Corp. West Africa is the source of about 70% of the world's

cocoa, the key ingredient for chocolate.

  The rain isn't expected to reverse the effects of dry weather in July and

August, when the main crop was developing, traders and analysts said. As a

result, the beans being harvested may be of lower quality or fewer in quantity.

  "I think that there's a little bit more upside" to prices, Mr. Shaffer said.

  Cocoa for December delivery on the ICE Futures U.S. exchange ended 0.7%

higher at $2,718 a ton Tuesday, the highest settlement since November 2011.

  Demand for cocoa beans ahead of the holiday season in the U.S. has also

buoyed prices for the chocolate ingredient. U.S. warehouse stock piles are at

their lowest level since Feb. 26, and are down 6% from a year ago.

  Traders also expect that cocoa grindings--the tonnage of beans processed in

Europe and North America-- will rise in the third quarter. Grindings are viewed

as a measure of demand for chocolate.

  The International Cocoa Organization estimates global cocoa supplies will

fall short of demand by about 70,000 tons in the 2013-14 season, which started

Oct. 1. The forecast came after supplies missed demand by 52,000 tons in the

2012-13 season, the first supply deficit since 2010.

  Cotton for delivery in December on ICE ended 0.4% lower at 83.69 cents a

pound, the lowest settlement since Sept. 9. Futures tumbled 3.6% during the

previous session after Tropical Storm Karen left growing areas in the

Southeastern U.S. largely unscathed.

  "The tropical storm did no damage, and (investors) really slammed (the

market)," said Mike Seery, president of Seery Futures, a brokerage in

Plainfield, Ill. And "with the harvest coming in, you're going to get that

supply and maybe some harvest pressure" on the market, he added.

  Raw sugar for March delivery settled 0.2% higher at 18.62 cents a pound, a

near 7-month high, on concerns about supplies in Brazil, the No. 1 producer of

the sweetener. Heavy rains have disrupted harvesting during the tail end of the

sugar-cane crop, pinching supplies as mills prioritize the production of

ethanol over sugar this season.

  Arabica coffee for December delivery ended 0.5% higher at $1.1505 a pound,

and orange juice for delivery in November closed 1.1% higher at $1.2920 a pound

in very thin trade.

Olam Sees Smaller Arabica Coffee Surplus as Robusta Supply Gains

2013-10-08 07:18:56.872 GMT

By Isis Almeida

     Oct. 8 (Bloomberg) -- The global surplus of arabica coffee, the variety favored by Starbucks Corp., will shrink 60 percent in the 2013-14 season started this month in most countries as supplies of robusta gain, according to Olam International Ltd.

     Arabica production will be about 2 million bags greater than demand, down from a surplus of 5 million bags in 2012-13, forecast the Singapore-based company, which trades enough beans to make more than 40 billion cups of coffee a year. Excess supply of robusta beans, used in instant coffee and espresso, will surge to 5 million bags from a balanced market a year earlier, said Dwayne Schmidt, a senior trader for Olam in White Plains, New York. A bag of coffee usually weighs 132 pounds.

     “There’s some decline in production in Central America, but the declining surplus is more a function of stable supply and increasing demand,” Schmidt said in an Oct. 4 interview in Basel, Switzerland, referring to arabica beans. “Robustas are a little bit different, in which the price of robusta is still above the cost of producing the coffee, so the robusta farmers are financially healthy and the crops will be healthy as well.”

     Arabica futures traded on ICE Futures U.S. in New York fell 20 percent this year and are headed for a third annual decline, the longest slump since 1993. Large crops in leading producers Brazil and Colombia helped boost supply. More demand for cheaper robusta beans mean prices on NYSE Liffe in London fared better, sliding 11 percent in 2013 after gaining 6.3 percent last year.

     “The real story on the robusta side has been the increase in demand,” Schmidt said. “Up to this point, the growth in demand has kept pace with the increase in the robusta crop, so we haven’t really seen a build-up in robusta inventories anywhere.”

                          Vietnam Crop

     Vietnam, the world’s largest robusta producer, will reap 28 million bags in 2013-14, a similar crop to the record in 2011-12, according to Olam. The figure includes about 1 million bags of arabica beans. Rising output in Brazil, the top coffee grower and second-biggest in robusta, will also help boost the surplus, Deepak Kaul, a Singapore-based vice president of the coffee division, said in the same interview.

     “A large part of the surplus is coming from Vietnam and Brazil,” he said. “We’ve seen in the past two years that nothing from Brazil is coming out. In Vietnam, in the last two years, farmers got a very good price realization for their robusta, so they are very well-capitalized and don’t have the need to sell, and are very happy to carry the coffee if the price doesn’t suit them.”

                         Robusta Surplus

     While a surplus of robusta beans is forecast this season, supplies will probably be tight until late December or early January and roasters will keep on tapping exchange-monitored stockpiles, according to Kaul. Inventories with a valid grading certificate in warehouses monitored by NYSE Liffe fell 19 percent from two weeks earlier to 60,380 tons as of Sept. 30, bourse data showed.

     “There isn’t much visible coffee available to see and the new crop is also a month, a month-and-a-half away,” Kaul said about Vietnam, adding that farmers there will release the crop slowly throughout the season. “The traditional thought of the Vietnamese farmer selling 60 percent of the crop before Tet is not valid anymore,” he said, referring to the lunar New Year.

     Indonesia, the third biggest robusta producer, gathered a slightly smaller crop in 2013-14 than a year earlier, at close to 10 million bags, Kaul said. Indonesia begins harvesting in April. Roasters are tapping exchange stockpiles as beans from producing nations are trading at a premium. Exchange-monitored inventories will reach 52,000 tons by the end of the year, the lowest since May 2000, a Bloomberg survey published in August showed.

                        Brazilian Harvest

     Arabica coffee production surged after prices rose to a 14- year high in 2011. Growers in Brazil will harvest in 2013 a record crop for a year in which trees enter the lower-yielding half of a two-year cycle, the government estimates. Output in Colombia, the second-biggest arabica producer, gained 30 percent in 2012-13, according to the nation’s Coffee Growers Federation.

     While a frost in Brazil’s Parana state in July will reduce output by 1 million bags next year and the yield-potential will be reduced in Zona da Mata, the main coffee belt in southern Minas Gerais and Cerrado will have “a very good crop,” Olam’s Schmidt said. He declined to provide a forecast and said the crop probably won’t be a record. Trees in Colombia are also very healthy and farmers have been receiving subsidies, he said.

                      Brazilian Stockpiles

     The size of the arabica surplus is about the same amount Brazil plans to stockpile. Latin America’s biggest economy is selling put-options that give growers the right to sell beans to the government at 343 reais ($156) a bag at the end of March, above market prices. The auctions may absorb as many as 3 million bags. Futures fell 2.2 percent in New York last month, when the options program was announced.

     “The producer has probably been more willing to sell at a lower price because he knows that in March he will get 343 reais,” Schmidt said. “Near-term it has been bearish. The market has not seen the effect of the put options and it will become more apparent in the January to June period, when availability of that type of coffee will be very tight.”

     Roasters in Brazil and in some developed importing countries have started to switch from robusta back to arabica as the price difference between the two kinds narrowed, said Thomas Gregersen, country head for Olam in Switzerland. While this trend is “just beginning to pan out,” increasing robusta demand from Asia and other developing nations means growth in robusta consumption is still positive, he said.

     Arabica coffee futures will probably trade sideways in New York for the next 12 months, Schmidt said. Futures for December delivery settled at $1.145 a pound yesterday on ICE. Prices ranged from a high of $1.579 in January to a low of $1.132 this month, exchange data showed.

     “Solving the problem for arabica is a question of price and time and if you do look further ahead into the next year, there will be a deficit,” Schmdit said, referring to 2015 and

2016 crops. “Until this next big crop from Brazil is hedged or a good percentage of it is hedged, the market will struggle to sustain rallies.”

Cocoa Trades Higher Again as Supply Concerns Loom

Neena Rai

  LONDON - Cocoa futures prices gained ground in European trading Monday as

concerns over supply shortages helped extend the increases made in the prior

session.

  "Cocoa futures rallied on Friday due to speculation that weeks of heat in

Ivory Coast and Ghana could cause serious crop damage, outweighing the fact

that rain was falling over the largest two cocoa producers of West Africa,"

said Vanessa Tan, investment analyst at Phillip Futures.

  "This rise...reversed from previous sessions as it was highly unlikely that

the rain could undo the heat stress experienced by the cocoa crops previously,"

she said. "It remains to be seen if the rainfall could significantly benefit

the stressed cocoa crops."

  December cocoa futures traded 1% higher at GBP 1,710 a metric ton at 1025

GMT, after hitting GBP 1,713 a ton--the highest level since Sept. 19.

  Elsewhere, November robusta coffee futures firmed 0.8% to $1,722 a ton.

Market sentiment remains positive after a much larger-than-expected drawdown in

certified stocks announced last week.

  Certified robusta stocks held in NYSE Liffe-nominated warehouses fell to

60,380 tons as of Sept. 30, down from 74,890 tons Sept. 16.

  "The equilibrium price of robusta coffee...is approximately $1,850 per ton in

the short, short term," said Mark Nucera, president of M.A. Nucera consultancy.

"Higher demand this fall or reductions in supply could bring a price closer to

$2,400 per ton considering how tight the robusta market is presently.

  "The media has focused on the larger Vietnam Robusta crop as a bearish

indicator.  Well, Vietnam's increased crop, if not impacted by the recent

cyclones (which seems highly unlikely), will be offset by a lower crop in

Indonesia available for export and in Africa," he said.

  Meanwhile, December sugar futures firmed 0.4% to $494.30/ton, while European

Union November wheat futures nudged 0.1% up to EUR 194.75 a ton, with the

market awaiting further news to any rain damage to CIS-region crops.

Arabica Coffee Futures Ease

Arabica-Coffee Futures Ease, Hover Above 4 1/2-Year Lows

  NEW YORK - Arabica-coffee futures slipped Monday morning as the market

continued to be pressured by massive supplies.

  Global supplies of coffee beans have swelled thanks to back-to-back bumper

crops from Brazil, the source of one-third of the world's coffee, and

recovering production from neighboring Colombia. Coffee futures hit fresh

four-and-a-half year lows last week of $1.1320 a pound.

  Arabica coffee for December delivery on the ICE Futures U.S. exchange was

recently 0.6% lower at $1.1375 a pound in very thin volume. Traders say futures

could head as low as $1 a pound, a level futures last touched in September

2006, before the market finds a bottom.

  Growers in Brazil are expected to harvest 47.5 million 60-kilogram

(132-pound) bags of coffee this year, a record for an "off-year" harvest,

government crop agency Conab has said.