July 23 (Bloomberg) -- Coffee futures rose for a second straight day on concern that frigid weather will damage crops in Brazil, the world’s biggest grower and exporter. Cocoa also gained, while sugar slid.
Frost may occur in Brazil during the next three days, the country’s National Meteorological Institute, or Inmet, said on its website. The crop risk tomorrow will be limited mostly to Parana state, which accounts for about 3 percent of production, forecaster Somar Meteorologia said in a report e-mailed today. Before this week, prices plunged 15 percent this year on signs of ample global supplies.
“The coffee market is going to be wild the next few days until the slow-moving cold front passes and we know what type of damage it caused, if at all,” Joe Scaduto, the president of JPS Commodities in East Rockaway, New York, said in a telephone interview.
Arabica coffee for September delivery climbed 0.6 percent to settle at $1.261 a pound at 2 p.m. on ICE Futures U.S. in New York, after falling as much as 1.6 percent.
Money managers and other large speculators cut their net-short position, or bets on a price slide, by 20 percent in the week ended July 16 to 21,460 futures and options, U.S. government data showed.
“Any market move could be magnified by the funds’ short position,” Scaduto said. Prices may rise as much as 20 cents if there is major crop damage, he said. “If no frost pans out, the market could grind back to $1.15 or even lower” as the cold season draws to a close early next month, he said.
Cocoa futures for September delivery climbed 0.5 percent to $2,359 a metric ton in New York.
Raw-sugar futures for October delivery fell 0.4 percent to 16.34 cents a pound on ICE, snapping a four-session rally.
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