Coffee Spread Falls From Record on Vietnam Sales; Cocoa Retreats

The premium robusta coffee for delivery in January commands over the March futures fell from a record on rising sales from Vietnam, the world’s leading producer of the variety. Cocoa retreated.

The beans used to make instant coffee and espresso for January delivery climbed to as much as $60 a metric ton above the March futures yesterday, a record since the spread started trading in July 2012. Prices will probably slide by the end of the first quarter as Vietnamese farmers will increase sales to 30 percent of the crop from 11 percent now, according to a Bloomberg survey published today.

“Vietnam is selling as prices are of reasonable value in dong terms,” Matthew Coughlan, a broker at BGC Partners LLC in London, said by e-mail, referring to the local currency. “More sales are to be expected given the crop that is forthcoming.”

Robusta coffee for January delivery tumbled 2.4 percent to $1,804 a ton by 10:40 a.m. on NYSE Liffe in London. The spread between the January and March futures fell to $41 a ton, signaling concerns that supplies are easing. Arabica coffee for delivery in March declined 0.3 percent to $1.099 a pound on ICE Futures U.S. in New York.

Vietnam will produce a record 30 million bags of 60 kilograms (132 pounds) this year, according to Volcafe, the coffee unit of commodities trader ED&F Man Holdings Ltd. Robusta supplies will be 2.4 million bags bigger than demand in the 2013-14 season started Oct. 1 in most countries, estimates Macquarie Group Ltd. (MQG), Australia’s biggest investment bank.

Robusta futures rallied 11 percent last month, the biggest gain for a most-active contract since 2011, on slow sales from Vietnam and falling stockpiles. Shipments from Vietnam slid to 80,000 tons in November, from 122,000 tons a year earlier, said the General Statistics Office. Inventories in warehouses tracked by NYSE Liffe were 45,900 tons as of Nov. 25, the lowest since at least 2002, data on Bloomberg showed.

Stockpiles

“It’s not really been fully a case of them holding back the crop, it’s been a timing issue,” Coughlan said, referring to Vietnamese farmers. “The crop wasn’t harvested and dried and the drop in the certified stockpiles added the extra spice that the Vietnamese seem to have taken advantage of.”

Cocoa for March delivery dropped 0.4 percent to 1,731 pounds ($2,839) a ton on NYSE Liffe. The December futures, which expire tomorrow, were trading at 1,704 pounds a ton. Cocoa for delivery in March retreated 0.6 percent to $2,757 a ton on ICE. Futures trading volumes were 64 percent lower than the average for the past 100 days at this time of day, data compiled by Bloomberg showed.

Refined, or white, sugar for March delivery was little changed at $451.60 a ton in London. Raw sugar for March delivery gained 0.4 percent to 16.69 cents a pound in New York.

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

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