Coffee extended losses in New York on speculation investors will continue to sell the futures as top grower Brazil will have an all-time high crop for a lower-yielding year and as output in Colombia recovers. Cocoa fell.
Growers in Brazil will harvest a record crop for a year in which trees enter the lower-yielding half of a two-year cycle, according to cooperative Cooparaiso in Sao Sebastiao do Paraiso in the state of Minas Gerais. Output in Colombia will rise 30 percent this year, Luis Genaro Munoz, head of the National Federation of Coffee Growers, estimated.
Small and large speculators excluding index funds were net short, or betting on lower prices, by 32,627 contracts in the week ended Feb. 26, according to U.S. Commodity Futures Trading Commission data compiled by Bloomberg. That’s up from a net short of 14,113 contracts in the week ended Feb. 28 last year. Investors’ bets on lower prices reached a record in the week ended Feb. 19.
“Arabica has bearish fundamentals, we know that,” Jerome Jourquin, head of agricultural commodity derivatives at brokerage Aurel BGC in Paris, said by e-mail today. “There has been speculation for some time now that funds will buy again but the problem is that we need a scenario to create an uptrend and we don’t have it. Any upside move would first generate origins and merchants selling. I expect the market to trade within a $1.35 to $1.45 a pound range in the coming weeks.”
Arabica coffee for delivery in May fell 0.1 percent to $1.4095 a pound by 7:55 a.m. on ICE Futures U.S. in New York. The commodity retreated as much as 4.2 percent yesterday. Robusta coffee for delivery in May was down 0.2 percent to $2,085 a ton on NYSE Liffe in London. Futures trading volumes in New York were 39 percent lower than the average in the past 100 days for this time of day.
Brazil will produce 47 million to 48 million bags of coffee this year, estimated Francisco Ourique, a manager at Cooparaiso. That compares with 43.1 million bags harvested in the last off-year, according to data from Conab, the government’s crop forecasting agency. Colombian output will gain to 10 million bags, Munoz said. A bag of coffee weighs 60 kilograms (132 pounds).
Prices declined yesterday after “what appears to have been liquidation of the recent spec longs,” Sucden Financial Ltd. said in a report, referring to speculators still holding a long position, or a bet on higher prices. Prices may still fall below $1.40 a pound, it said.
Raw sugar for May delivery was up 0.2 percent at 18.22 cents a pound in New York. White sugar for May delivery was 0.1 percent higher at $517.40 a ton in London.
Cocoa for May delivery slid 0.5 percent to $2,048 a ton on ICE, and earlier fell as much as 0.7 percent to $2,045, the lowest price for a most-active contract since June 4. Cocoa for May delivery fell 0.4 percent to 1,385 pounds ($2,090) a ton on NYSE Liffe, and declined earlier as much as 0.6 percent to 1,383 pounds, the lowest price since April 12.