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Coffee Posts Biggest Weekly Gain in 15 Months; Sugar Declines

Dec. 13 (Bloomberg) -- Arabica coffee rose, capping the biggest weekly gain in 15 months, on speculation that roasters will use more of the premium beans as robusta supplies tighten. Cotton climbed, while sugar, cocoa and orange juice fell.

Robusta inventories monitored by NYSE Liffe in London slid 32 percent in the past two weeks to the lowest since at least 2002 after exports ebbed from Vietnam, the world’s top grower of the variety. The arabica premium to robusta has surged 20 percent from a five-year low on Dec. 9.

There is “arbitrage buying amid some modest switching to low-quality arabicas” as “roasters struggle to obtain robusta due to the current supply squeeze,” Kona Haque, an analyst at Macquarie Group Ltd. in London, said in an e-mail.

Arabica coffee for March delivery jumped 3.5 percent to settle at $1.1525 a pound at 2 p.m. on ICE Futures U.S. in New York. This week, the price rose 8.3 percent, the most since Sept. 14, 2012.

The beans, brewed by specialty companies including Starbucks Corp., touched a seven-year low of $1.0095 on Nov. 7. The commodity may trade from $1 to $1.20 in the near term, Luiz Eduardo de Paula, the owner of H. Commcor Ltda., a broker in Sao Paulo, said in an e-mail. Today, the premium to robusta rose to 33.65 cents from 27.95 cents on Dec. 9.

Robusta-coffee futures for March delivery rose 1.4 percent to $1,799 a metric ton in London. This week, the price climbed 6.2 percent, the most in 22 months. Earlier, the beans, used to make instant brands, reached $1,813, the highest since Aug. 22.

Cotton futures for March delivery advanced 0.2 percent to 83.22 cents a pound on ICE. Earlier, the price reached 83.42 cents, an eight-week high.

Raw-sugar futures for March delivery fell 0.2 percent to 16.27 cents a pound. The price dropped for the eighth straight week, the longest slump since April 2003.

Cocoa futures for March delivery declined 0.5 percent to $2,774 a ton. Orange-juice futures for January delivery dropped 1.2 percent to $1.4445 a pound. The price climbed in the previous six sessions.

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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