Coffee May Fall on Slow Demand Before Large Crops; Cocoa Climbs

Coffee may fall in New York and London on concerns high prices will dent demand as large crops are expected in Central America and Vietnam. Cocoa rose.

Countries in Central America will produce 13.4 million 60- kilogram (132.3 pound) bags of coffee in the 2011-12 season, according to data on the website of the U.S. Department of Agriculture, the highest since the 1999-2000 crop. Vietnam, the largest grower of the robusta variety, will produce a record 22 million bags, Rabobank International estimates.

“Coffee is down on concerns the price has moved too high, too fast and commercial interest could be tailing off given high levels,” Keith Flury, an analyst at Rabobank International in London, wrote in an e-mail today.

Arabica coffee for December delivery fell 0.80 cent, or 0.3 percent, to $2.859 a pound by 8:20 a.m. on ICE Futures U.S. in New York. Robusta coffee for November delivery slid $29, or 1.2 percent, to $2,323 a metric ton NYSE Liffe in London, erasing earlier gains of as much as 0.8 percent.

Brazilian producers may start to sell as the price of coffee in the Sao Paulo futures exchange, or BM&F, is below the New York value, Flury said. “With NY outpacing BM&F there are likely concerns that Brazilian farmers may sell.”

Robusta futures prices are being capped by “better prospects” in 2012, Lysu Paez, an analyst at Natixis SA in Paris wrote in an e-mail today. She correctly forecast earlier this month that robusta coffee would climb above $2,300 a ton.

Vietnamese Premiums

Expectations of a larger crop next season have resulted in buyers demanding a discount for Vietnamese beans, according to three people involved in the trade.

The beans are trading at $70 to $90 a ton below the price on NYSE Liffe, according to the people, who declined to be identified because they aren’t authorized to speak to the media. Robusta beans from the current crop are trading at a premium of $80 to $100 a ton over the London price, traders said.

Raw sugar for October delivery advanced 0.07 cent, or 0.2 percent, to 29.69 cents a pound in New York. White, or refined, sugar for October delivery slid $4.60, or 0.6 percent, to $769.40 a ton in London.

India, the world’s second-largest sugar producer after Brazil, is likely to be a “steady” importer of the sweetener over the next 10 years, Olam International Ltd. said. Supply and demand for sugar will probably be balanced only in two of the next 10 years, Olam said in a document related to its announcement today that it bought Hermarus Industries Ltd., a sugar factory in India, for $73.8 million.

Cocoa for December delivery climbed $13, or 0.4 percent, to $3,115 a ton on ICE. Cocoa for December rose 2 pounds, or 0.1 percent, to 1,951 pounds ($3,184) a ton on NYSE Liffe.

To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.