Coffee Rises Most in 8 Months on Brazil Supply Risk; Cocoa Gains

Coffee futures gained the most in eight months on speculation that dry weather will curb 2014 output in Brazil, the world’s largest producer. Cocoa also rose, while orange juice, sugar and cotton slid.

Flowers that bloomed on coffee trees during last week’s rain may be damaged by dryness this week in southern Zona da Mata, before precipitation resumes by Sept. 16, Overland Park, Kansas-based World Weather Inc. said in a report yesterday. The area is located in Minas Gerais, the biggest producing state. Prices slumped 16 percent this year on abundant global supply, including a bumper crop from the South American nation.

“There is some concern about dry weather in Brazil causing damage to trees that have already flowered,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said by e-mail.

Arabica-coffee for December delivery jumped 3.6 percent to settle at $1.208 a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest gain for a most-active contract since Jan. 2. Prices earlier reached $1.211, the highest since Aug. 20.

In the week ended Sept. 3, money managers and other large speculators cut their net-short position, or bearish bets, by 1.3 percent to 22,717 futures and options, government data show.

This week, Brazil’s crop forecasting agency, called Conab, trimmed its estimate for 2013 output by 2.3 percent from a May projection and said that next year’s harvest may not match the record reaped in 2012, in part because farmers cut investments. In 2013-2014, world production will exceed demand for the fourth straight year, the U.S. government projects.

Upside ‘Limited’

“The reduced crop estimate is also supporting prices,” John Caruso, a senior commodities broker at RJO Futures in Chicago, said in a telephone interview. “The upside will be limited because global supplies remain ample.”

Cocoa futures for delivery in December rose less than 0.1 percent to $2,571 a metric ton, after reaching $2,599, the highest for a most-active contract in almost a year.

Orange-juice futures for November delivery tumbled 1.4 percent to $1.3505 a pound.

Hurricane Humberto, the first of the season in the Atlantic, is expected to turn north, away from orange groves in Florida, on track to sweep by Nova Scotia and strike Newfoundland later this week, according to Environment Canada. Florida is the world’s largest citrus grower after Brazil.

Raw-sugar futures for October delivery fell 0.1 percent to 17.17 cents a pound on ICE, snapping a four-session rally. Cotton futures for December delivery dropped 0.1 percent to 84.35 cents a pound.

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