U.S. Commodities: Coffee, Sugar Lead Rally in Raw Materials

Coffee futures surged to a 13-year high on mounting concern that global supplies will trail demand, and commodities climbed to a 26-month high on signs of shortfalls in agriculture markets including sugar and cotton.

A shortage of high-quality arabica coffee has led to “precariousness of the supply/demand balance,” the International Coffee Organization said last week. Price also climbed on demand from funds. Futures have surged 66 percent this year, heading for the biggest annual gain since 1994.

“There is a lot of fund buying,” said Rodrigo Costa, the vice president of institutional sales at Newedge USA LLC in New York. “The fundamentals are very supportive.”

In other markets, sugar climbed the most in four weeks as lower output from Brazil may signal a record harvest is nearing an end. Corn also gained. The Thomson Reuters/Jefferies CRB Index of 19 raw materials rose as much as 1.2 percent to 321.04, the highest since October 2008.

Arabica coffee for December delivery gained 8.75 cents, or 4 percent, to settle at $2.253 a pound on ICE Futures U.S. in New York, the biggest gain since Nov. 18. Earlier, the price reached $2.267, the highest since June 1997. This week, the commodity jumped 7.5 percent, the most since mid-June.

Flooding in Colombia, the world’s second-largest grower of arabica beans, has threatened crops, damaged roads and delayed agriculture shipments, a U.S. Department of Agriculture unit said last week. The heavy rain from a La Nina weather pattern was forecast to last until the first quarter of 2011.

The UBS Bloomberg Constant Maturity Commodity Index of 26 prices advanced 1.1 percent to 1,582.6.

Sugar

Raw sugar for March delivery rose 1.5 cents, or 4.8 percent, to settle at 32.5 cents a pound on ICE, the biggest gain since Nov. 18. This week, the price jumped 12 percent, the most since early October.

Output in Brazil’s Center South, the world’s biggest producing region, fell 18 percent in the second half of November from a year earlier, Unica, an industry group, said on Dec. 14. The harvest is usually completed in December, according to the U.S. agricultural attache in Sao Paulo.

“The Unica numbers showed that we are close to the end of the harvest, which may be a very good support for London and New York futures,” said Fabienne Pointier, an analyst at Lausanne, Switzerland-based research company Kingsman SA.

Earlier, sugar reached 32.97 cents, the highest since Nov. 11. The price has gained 21 percent this year.

Corn

Corn rose to a five-week high after a private forecaster cut its estimate for planting next year in the U.S., the world’s largest grower and exporter.

Informa Economics Inc. said farmers will plant corn on 90.755 million acres, less than a November forecast of 93.055 million. Soybeans will be sown on 77.565 million, down from a record 77.714 million this year, the Memphis-based researcher said today in a report. Informa said farmers may plant the most acres of cotton in five years, after prices jumped to a record.

“We are in a battle for acres, and the trade wants to build in a premium” to encourage more planting, said Mike Zuzolo, the president of Global Commodity Analytics & Consulting in Lafayette, Indiana. “This is an issue that will not be resolved until the planting season,” which will begin in Texas in February, Zuzolo said.

Corn futures for March delivery rose 9 cents, or 1.5 percent, to settle at $5.965 a bushel on the Chicago Board of Trade. Earlier, the price reached $5.99, the highest since Nov. 9.

Commodities settled as follows:

Precious metals: February gold up $8.20 to $1,379.20 an ounce March silver up 35.1 cents to $29.133 an ounce January platinum down 10 cents to $1,698.50 an ounce March palladium down $3.95 to $738.60 an ounce

Livestock: February live cattle up 0.975 cent to $1.045 a pound March feeder cattle up 0.95 cents to $1.1995 a pound February lean hogs up 1.375 cents to 75.95 cents a pound February pork bellies unchanged at $1.06 a pound

Grains: March soybeans up 10 cents to $13.105 a bushel March corn up 9 cents to $5.965 a bushel March wheat up 7 cents to $7.5675 a bushel March oats up 1 cent to $3.865 a bushel

Food and Fiber: March coffee up 8.75 cents to $2.253 a pound March cocoa down $52 to $2,951 a metric ton March cotton up 4 cents to $1.5012 a pound March sugar up 1.5 cents to 32.5 cents a pound March orange juice up 0.4 cent to $1.574 a pound

Energy: January crude oil up 32 cents to $88.02 a barrel January natural gas up 1.8 cents to $4.066 per million British thermal units January heating oil down 0.26 cent to $2.4737 a gallon January gasoline up 1.35 cents to $2.3178 a gallon

Others: March copper up 4.3 cents to $4.159 a pound March lumber up $8.40 to $311.40 per 1,000 board feet

To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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