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Coffee Falls on Supply Before U.S. Budget Talks; Cocoa Advances

Dec. 28 (Bloomberg) -- Arabica coffee, heading for the biggest annual decline in 12 years, fell for a second day in New York on speculation slowing economies will dent demand just as supplies are ample. Cocoa and sugar gained.

U.S. congressional leaders plan to meet with President Barack Obama today and House Republicans said they will convene Dec. 30 as lawmakers seek to avoid more than $600 billion in spending cuts and tax increases starting next month. Brazil, the world’s largest coffee grower, will produce a record 50.8 million bags in the 2012-13 season, according to the country’s Agriculture Ministry. A bag of coffee weighs 132 pounds.

“The combination of fiscal cliff and European worries cast a long shadow on a market that lacks much in the way of a bullish case for the fundamentals,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, wrote in a report e-mailed yesterday. “Coffee prices remain quite strained on pressure from supplies which continue to be plentiful.”

Arabica coffee for March delivery was down 0.4 percent to $1.473 a pound by 7:21 a.m. on ICE Futures U.S. in New York. It’s fallen 35 percent this year, making it the worst performing commodity in the Standard & Poor’s gauge of 24 raw materials. Robusta coffee for March delivery dropped 0.4 percent to $1,913 a ton on NYSE Liffe in London, 5.8 percent higher this year.

Trading in coffee futures on ICE was about 29 percent lower than the 30-day average for this time of day, according to data compiled by Bloomberg.

Coffee Stockpiles

Robusta coffee fell for the first time in seven sessions as exchange-monitored inventories advanced for the first time since Oct. 1 and exports from top grower Vietnam are set to jump. Stockpiles were 106,540 tons on Dec. 24, up 1.3 percent from two weeks earlier, exchange data showed. Vietnam’s 2012 bean exports will climb 40 percent to 1.76 million tons, the Ministry of Agriculture and Rural Development said.

“While a recent bounce created some meager optimism, Vietnamese supplies will continue to be working into the market and this will weigh on prices,” Smith said.

Cocoa for March delivery gained 0.7 percent to $2,271 a ton ICE. It rose 7.6 percent this year. Cocoa for March delivery gained 0.3 percent to 1,445 pounds ($2,332) a ton on NYSE Liffe. The commodity was up 4.7 percent this year.

Raw sugar for March delivery was 0.3 percent higher at 19.51 cents a pound in New York. It lost 16 percent this year. White, or refined, sugar for March delivery was up 0.2 percent to $523.20 a ton in London. It fell 13 percent this year.

To contact the reporter on this story: Isis Almeida in London at

To contact the editor responsible for this story: Claudia Carpenter at

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