Arabica coffee climbed in New York to the highest level in more than three weeks as investors bought the futures on speculation prices may have bottomed. Sugar retreated.
The beans traded on ICE futures U.S. gained 3.9 percent yesterday after a vote in the House of Representatives broke a year-long impasse over how to avert $600 billion in tax increases and spending cuts that threatened to send the economy back into recession. Speculators are now closing out bets on lower prices after arabica fell the most in 12 years and was the worst performing commodity in the Standard & Poor’s index of 24 raw materials last year, according to Citigroup Inc.
“Coffee, 2012’s biggest loser, started out 2013 with a noticeable pop as the strength from the fiscal cliff was seen lifting values and generating plenty of short covering,” Sterling Smith, a futures specialist at Citigroup in Chicago, wrote in a report e-mailed yesterday. Another day of gains today “would confirm ideas of bottoming,” he said.
Arabica coffee for March delivery rose 0.9 percent to $1.508 a pound by 5:39 a.m. on ICE Futures U.S. in New York. The price touched $1.512 a pound, the highest since Dec. 10. Robusta coffee for March delivery advanced 1 percent to $1,962 a metric ton on NYSE Liffe in London.
Large and small speculators excluding index funds were net short, or betting on falling prices, by 30,918 contracts in the 6-day period ended Dec. 24, data from the Washington-based U.S. Commodity Futures Trading Commission compiled by Bloomberg showed. Bets on falling arabica coffee prices reached a record 35,174 contracts in the week ended Nov. 16.
“Sooner or later the folly that is the current record short spec fund positions will be reversed, exposing the underbelly of a coffee market that remains in a long-term structural deficit,” Shawn Hackett, the president of Hackett Financial Advisors Inc. in Boynton Beach, Florida, said in a report e-mailed yesterday. “When coffee makes the turn back up, it will be explosive in nature and catch everyone off guard.”
Raw sugar for March delivery fell 0.4 percent to 19.61 cents a pound in New York. White sugar for March delivery slid 0.3 percent to $526.70 a ton in London.
Cocoa for March delivery was 0.1 percent lower at $2,256 a ton on ICE. Cocoa for March delivery was 0.1 percent higher at 1,431 pounds ($2,317) 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.