U.S. Commodities: Coffee Extends Rally to Highest Since 1997

Coffee prices rose, extending a rally to the highest since 1997, as inventories tallied by an industry group remain close to a 40-year low.

Jose Sette, the executive director of the International Coffee Organization, said that stockpiles held by exporting nations probably will be little changed this year around 13 million bags, the lowest since the group started keeping records in the 1960s. Prices have surged 95 percent in the past 12 months as global demand outpaced supplies.

“The horizon is not very promising,” said Rodrigo Costa, the vice president of institutional sales at Newedge USA LLC in New York. “There is no recovery in supply coming.”

In other markets, wheat prices extended a rally to the highest since 2008 on signs that political tension in the Middle East and North Africa is spurring governments to boost grain imports, while drought threatens the crop in China. Corn and soybeans dropped. The UBS Bloomberg Constant Maturity Commodity Index advanced 0.7 percent to 1,720.46.

Arabica coffee for May delivery advanced 6.75 cents, or 2.6 percent, to $2.617 a pound on ICE Futures U.S. in New York. Earlier, the price reached $2.6225, the highest for a most- active contract since June 1997.

Consumption may rise this year from about 131 million bags in 2010, Sette said in a telephone interview from London on Feb. 11. A bag weighs 60 kilograms (132 pounds).

“There is simply not enough coffee in the world,” Sette said.

Wheat

Wheat futures for May delivery rose 5.25 cents, or 0.6 percent, to settle at $9.04 a bushel on the Chicago Board of Trade. Earlier, the price reached $9.1675, the highest for a most-active contract since August 2008. The grain surged 80 percent in the past year after drought slashed Russian production and floods damaged crops in Australia and Canada.

Egypt, the largest importer, on Feb. 11 agreed to buy 170,000 metric tons, including 55,000 from the U.S. Iraq is buying wheat from the U.S. and Australia, Reuters reported. Prices in China, the world’s largest consumer and producer, jumped to a record after the government said snow failed to ease dry conditions.

“Unrest in the Middle East is probably causing some stockpiling,” said Mike Zuzolo, the president of Global Commodity Analytics & Consulting in Lafayette, Indiana. The market “is able to hang on there nicely, given the Egypt tender and expectations for more tenders from the Middle East in the next day or two.”

Corn, Soybeans

Corn fell from a 31-month high and soybeans declined after the government said U.S. farmers, the biggest growers, intend to expand acreage this year after prices surged.

The area planted with corn may rise 4.3 percent to 92 million acres, the most since 2007, from 88.2 million last year, the Department of Agriculture said today in a report. Soybean acreage may climb 0.8 percent to a record 78 million.

“The USDA estimates were on the high side of what people have been talking about,” said Marty Foreman, an economist at Doane Advisory Services Co. in St. Louis. “The revenue per acre is very attractive to plant more acres of everything.”

Corn futures for May delivery fell 10.75 cents, or 1.5 percent, to close at $7.065 a bushel on the CBOT. Earlier, the price reached $7.21, the highest since July 9, 2008, after the U.S. announced 145,000 tons of export sales to Mexico. The commodity has surged 89 percent in the past year.

Soybean futures for May delivery fell 13 cents, or 0.9 percent, to $14.16 a bushel. Earlier, the price touched $14.1325, the lowest for the contract since Jan. 31.

Commodities settled as follows:

Precious metals: April gold up $4.70 to $1,365.10 an ounce March silver up 53.9 cents to $30.534 an ounce April platinum up $14.10 to $1,827.60 an ounce March palladium up $18.10 to $832.80 an ounce

Livestock: April live cattle up 1.175 cents to $1.13875 a pound March feeder cattle up 2.35 cents to $1.28375 a pound April lean hogs up 0.075 cent to 92.45 cents a pound February pork bellies up 2 cents to $1.19 a pound

Grains: May soybeans down 13 cents to $14.16 a bushel May corn down 10.75 cents to $7.065 a bushel May wheat up 5.25 cents to $9.04 a bushel May oats down 6.5 cents to $4.19 a bushel

Food and Fiber: May coffee up 6.75 cents to $2.617 a pound May cocoa up $35 to $3,406 a metric ton May cotton down 2.5 cents to $1.8306 a pound May sugar down 0.61 cent to 28.78 cents a pound May orange juice up 2.3 cents to $1.6665 a pound

Energy: March crude oil down 77 cents to $84.81 a barrel March natural gas up 1.5 cents to $3.925 per million British thermal units March heating oil up 5.46 cents to $2.7504 a gallon March gasoline up 5.22 cents to $2.5174 a gallon

Others: May copper up 9.05 cents to $4.6375 a pound May lumber down 70 cents to $326.80 per 1,000 board feet

To contact the reporter on this story: Chris Prentice in New York at Cprentice3@bloomberg.net; Heather Walsh in Bogota at hlwalsh@bloomberg.net.

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

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