Arabica coffee rebounded in New York after falling the most in five weeks yesterday as most growing areas in Brazil, the world’s leading producer, escaped damaged from frost. Sugar advanced.
While frost formed in some coffee growing areas of Parana, the state’s production accounts for only 3.5 percent of Brazil’s total, according to data from forecaster Somar Meteorologia. Frost also reached corn, wheat and sugar cane growing areas in the states of Parana, Mato Grosso do Sul and Santa Catarina yesterday, Marco Antonio dos Santos, an agronomist at Somar, said in a report e-mailed yesterday.
“The frost threat did materialize, however, it did not really produce any meaningful damage,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said in a report e-mailed yesterday. “Coffee will likely retreat back to the lows, but we are not looking for selling to be as intensive by the funds.”
Arabica coffee for delivery in September gained as much as 0.7 percent to $1.2215 a pound on ICE Futures U.S. and was up 0.3 percent at $1.216 a pound by 7:24 a.m. in New York. Prices fell 3.8 percent yesterday. Robusta coffee for September delivery fell 0.5 percent to $1,887 a metric ton on NYSE Liffe in London.
Parana is set to produce 1.7 million bags of coffee this year, while total output in Brazil was estimated at 48.6 million bags, according to Conab, the government’s crop-forecasting agency. A bag weighs 132 pounds.
Arabica coffee fell 16 percent this year as supplies outpace demand. Prices will be at about $1.20 a pound for the next quarter, with upside limited, Mathijs Deguelle, an analyst at ABN Amro Group NV, said in a report e-mailed today.
“In the short- to mid-term, however, ABN Amro expects prices to remain below production costs, at least until the current enormous surplus has been absorbed,” he said.
Raw sugar for delivery in October gained 0.9 percent to 16.29 cents a pound on ICE. White sugar for October delivery was up 0.3 percent to $476 a ton on NYSE Liffe.
Cocoa for September delivery was little changed at $2,361 a ton in New York. Cocoa for September delivery was 0.5 percent higher at 1,603 pounds ($2,450) a ton in London.