Robusta Coffee Rallies Most Since June 2011 as Stockpiles SlumpMarvin G. Perez
Robusta coffee, used in espresso, surged the most in 29 months as inventories declined and exports fell from Vietnam, the world’s top grower of the beans.
Stockpiles tracked by NYSE Liffe tumbled 57 percent this year and were at the lowest since at least 2002 as of Nov. 25, exchange data show. Coffee exports from Vietnam slid 34 percent to 80,000 metric tons last month from an estimated 122,000 tons a year earlier, according to data from the nation’s statistics office.
Prices slumped 9.9 percent this year on signs of rising harvests. Global coffee production, which includes the arabica variety favored by Starbucks Corp., will exceed consumption for a fourth season in 2014, the longest glut in 11 years, U.S. government data show. Lower costs improved profit margins for Green Mountain Coffee Roasters Inc., while Kraft Foods Group cut the retail cost of some packaged beans this year.
“Inventories have fallen below what’s considered a critical level,” Hernando de la Roche, a senior vice president at INTL FCStone in Miami, said in a telephone interview. “Vietnamese producers are not very willing to sell much at these prices.”
Robusta-coffee futures for January delivery jumped 4.5 percent to settle at $1,733 a metric ton at 5:33 p.m. on NYSE Liffe in London. That’s the biggest gain for a most-active contract since June 28, 2011. Earlier, the price reached $1,742, the highest since Oct. 14.
Prices rose for a sixth straight session, the longest rally since Dec. 27. Vietnam will start celebrating the Lunar Tet holiday late next month. Robusta is also used in instant coffee.
“People are realizing there may not be much coffee coming into Liffe warehouses in the next few weeks, or in January, before the Tet holiday,” de la Roche said. That’s prompting some traders to close short bets, or wagers on declining prices, he said.
Price gains accelerated today after futures climbed higher than the 100-day moving average, near $1,711, de la Roche said.
In New York, arabica coffee for March delivery gained 0.3 percent to $1.102 a pound on ICE Futures U.S. Prices have slumped 23 percent this year.