(Corrects Sao Paulo production in fifth paragraph.)
Arabica coffee climbed for a second day in New York on speculation investors are closing bets on lower prices before cold weather that may bring frost to some producing areas in leading grower Brazil. Cocoa and sugar rose.
A polar air mass will advance in the state of Parana early tomorrow, with minimum temperatures falling as low as minus 1 degree Celsius (30 degrees Fahrenheit), weather forecaster Somar Meteorologia said in a report e-mailed yesterday. While cold weather may bring frost to some areas of Parana, lower temperatures in the southeast will leave trees undamaged in Sao Paulo and Minas Gerais, the largest arabica-producing state, Somar said.
“All eyes are on the Brazilian weather and whether or not we see some degree of crop damage from the cold snap expected mid-week,” Sterling Smith, a futures specialist at Citigroup Inc., said in a report e-mailed yesterday. “Forecasts are looking for cold, but extremely limited, if any, crop damage.”
Arabica coffee for delivery in September advanced 0.9 percent to $1.264 a pound by 6:33 a.m. on ICE Futures U.S. in New York. Robusta coffee for the same delivery month rose 0.5 percent to $1,954 a metric ton on NYSE Liffe in London.
Parana is forecast to produce 1.7 million bags of coffee in the 2013-14 season, while total production in Brazil is estimated at 48.6 million bags, according to data from the state crop-forecasting agency, known as Conab. Minas Gerais is set to produce 25.5 million bags and Sao Paulo 4.3 million bags, the data showed.
Funds with short positions, or betting on lower prices, reacted to predictions for colder weather by some forecasters, Rodrigo Costa, a trading director at Elmsford, New York-based dealer Caturra Coffee Corp., wrote in a report July 21 for Sao Paulo-based Archer Consulting, where he acts as a contributor. While lower temperatures may not damage the crop, holders of short positions opted against running the risk, he said.
Large and small speculators excluding index funds reduced their net-short position, or bets on lower prices, for arabica coffee to 28,452 contracts in the week ended July 16, according to U.S. Commodity Futures Trading Commission figures.
Cocoa for delivery in September gained 0.8 percent to 1,604 pounds ($2,462) a ton in London. Cocoa for the same delivery month climbed 0.7 percent to $2,365 a ton in New York.
Refined, or white, sugar for delivery in October added 0.5 percent to $474.50 a ton on NYSE Liffe. Raw sugar for the same delivery month gained 0.2 percent to 16.43 cents a pound on ICE.
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