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Coffee Slumps to 33-Month Low as Brazil Sales Slow; Cocoa Falls

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March 15 (Bloomberg) -- Arabica-coffee futures tumbled to a 33-month low on signs of abundant supply from Brazil, the world’s top grower and exporter. Cocoa also dropped, while sugar and orange juice gained.

Brazilian farmers had sold 71 percent of their coffee harvest by Feb. 28, compared with 87 percent a year earlier, said Diogo Metzdorff, a market analyst at Safras & Mercado in Porto Alegre, Brazil. Sellers waited for higher prices while demand for exports remained sluggish, Metzdorff said. Inventories in warehouses monitored by ICE Futures U.S. in New York were at 2.7 million bags as of yesterday, the highest since March 5, 2010, exchange data show.

“The market is in a funk right now that I’ve rarely ever seen,” Joe Scaduto, the president of New York-based JPS Commodities LLC, said in a telephone interview. “The only thing that’s going to get you out of this hole is some kind of frost disaster or something like that. The shorts know they’re in control.”

Arabica-coffee futures for delivery in May fell 1.5 percent to settle at $1.375 a pound at 2 p.m. on ICE, the fifth straight drop and the longest losing streak since Aug. 16. Earlier, the price touched $1.3715, the lowest for a most-active contract since June 10, 2010.

Money managers and other speculators have been bearish on arabica futures since July, and as of March 5 boosted their net-short position, or bets on a price slide, by 6.8 percent from a week earlier, government data show.

Brazil will harvest 47 million to 48 million bags of coffee this season, a record for a year in which trees enter the lower-yielding half of their production cycle, according to Cooparaiso in Sao Sebasitiao do Paraiso, a growers group in Menas Gerais, the nation’s largest arabica-producing state. A bag of coffee weighs 60 kilograms, or 132 pounds.

Also in New York, cocoa futures for May delivery fell 0.7 percent to $2,115 a metric ton, the third straight loss.

Raw-sugar futures for May delivery rose 0.3 percent to 18.89 cents a pound, while orange-juice futures for May delivery climbed 1.6 percent to $1.392 a pound.

To contact the reporter on this story: Oliver Renick in Chicago at orenick1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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