Coffee Futures Fall as Favorable Weather Aids Brazil CropMarley DelDuchetto Kayden
Coffee fell the most in three weeks on signs that crops in Brazil, the world’s top producer, will avoid frost damage. Sugar extended a slump to a three-year low, while cocoa dropped. Orange juice and cotton rose.
Temperatures will remain above freezing in Brazil over the next two weeks, and the coffee-growing states of Sao Paulo and Parana will be mostly dry, said Donald Keeney, a meteorologist at MDA Information Systems Inc. in Gaithersburg, Maryland. About 44 percent of the harvest was completed as of July 3, compared with 40 percent a year earlier, Safras & Mercado, a research company, said on July 10. Prices have tumbled 34 percent in the past 12 months amid a global surplus.
“Brazilian weather has no frost threats for the next 10 to 20 days, and harvest progress is moving along nicely, so that will weigh on prices,” Sterling Smith, a futures trading specialist at Citigroup Inc. in Chicago, said in a telephone interview. “There is nothing supporting coffee right now.”
Arabica coffee for September delivery fell 3.2 percent to close at $1.194 a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest drop for a most-active contract since June 20. A plunge in the value of the real against the dollar has spurred Brazilian producers to boost exports.
Brazil’s harvest this year will total 53.7 million bags, the third-largest ever, expanding domestic stockpiles by 22 percent to 8.23 million bags, the U.S. Department of Agriculture estimates. A bag weighs 60 kilograms (132 pounds).
Today, the arabica premium over the robusta variety plunged 9.6 percent, the biggest drop in almost a year, to 34.35 cents a pound, the lowest since Dec. 5, 2008.
The premium reflects the arabica settlement compared with robusta futures for September delivery on NYSE Liffe in London. In 2012, the premium averaged 84.16 cents and reached a high of $1.515 on Jan 11.
Robusta declined 0.4 percent today to $1,875 a metric tons (85.05 cents a pound).
Arabica, brewed by specialty companies including Starbucks Corp., has slumped 17 percent this year, while robusta, used in instant coffee, has declined 2.5 percent
Raw-sugar futures for October delivery slipped 0.2 percent to 16.06 cents a pound. Earlier, the price touched 16.03 cents, extending a slump to the lowest since July 1, 2010. This year, the commodity has dropped 18 percent.
Cocoa futures for September delivery slid 0.1 percent to $2,236 a ton on ICE. Earlier, the price reached $2,260, the highest since June 14.
Orange-juice futures for September delivery rose 2.8 percent to $1.392 a pound, the biggest gain since May 29. The price has advanced 19 percent this year.
Cotton futures for December delivery rose 0.4 percent to 85.08 cents a pound. The price has climbed 13 percent this year.