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Arabica-Coffee Futures Jump Most in 15 Months on Inventory Drop

Brazil Coffee Harvest
Stockpiles of arabica coffee, brewed by specialty companies including Starbucks Corp., have slumped to a the lowest since February, ICE Futures U.S. data show. Photographer: Dado Galdieri/Bloomberg

Dec. 10 (Bloomberg) -- Arabica-coffee futures rallied the most in 15 months as inventories dropped amid speculation that roasters will use more of the variety as supplies of robusta beans shrink.

Stockpiles of arabica, brewed by specialty companies including Starbucks Corp., have slumped to the lowest since February, ICE Futures U.S. data show. Inventories of robusta, used in instant brands, were the smallest since at least 2002, according to NYSE Liffe figures.

The robusta price in London “is working higher, and stockpiles are falling, providing support” for arabica, Luiz Fernando de Mello Monteiro, a broker at Sao Paulo-based H.Commmcor Ltda., said in a telephone interview. Companies may use more arabica beans in the short term, he said.

Arabica futures for March delivery surged 3.9 percent to settle at $1.1025 a pound at 2 p.m. on ICE in New York, the biggest advance for a most-active contract since Sept. 10, 2012.

The rally accelerated after prices topped $1.0875, triggering preset buying orders, de Mello said.

Robusta futures for March delivery increased 4.1 percent to $1,793 a metric ton (81.33 cents a pound) on Liffe in London. Earlier, the price reached $1,803, the highest since Aug. 22, partly as exports dropped from Vietnam, the world’s biggest producer of the variety.

Arabica has tumbled 23 percent this year, while robusta dropped 6.8 percent.

Today, the arabica premium versus robusta rose to 28.92 cents a pound from 27.95 cents, the lowest since Oct. 7, 2008.

Vietnam Shipments

“The premium at the lowest in five years may lure good buying interest” for arabica, Hernando de la Roche, a senior vice president at INTL FCStone in Miami, said in an e-mail. “The big question is: How long the robusta market will continue to rise? Usually, farmers begin to sell more as the Tet festival in Vietnam approaches, and this year, it will start at the end of January.”

In the week ended Dec. 3, money managers and other large speculators reduced their net wagers on an arabica price decline by 9.6 percent, the fourth straight cut, Commodity Futures Trading Commission data showed on Dec. 6.

“If the markets are rising just on short-covering, prices could correct rapidly and the premium may widen again,” de la Roche said in a telephone interview.

Shares of Seattle-based Starbucks fell as much as 3.8 percent to $76.68. Through yesterday, the stock jumped 49 percent this year.

To contact the reporter on this story: Marvin G. Perez in New York at mperez71@bloomberg.net

To contact the editor responsible for this story: Millie Munshi at mmunshi@bloomberg.net

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