Arabica-Robusta Premium at 2-Year High Fuels Switch Prospects

The highest premium for arabica coffee, favored by Starbucks Corp., over the robusta variety in two years is fueling speculation roasters will boost purchases of the cheaper variety used to make instant drinks.

Arabica futures traded in New York were $1.046 a pound more expensive than robusta beans in London today. The price gap, or arbitrage, reached $1.087 yesterday, the highest since March 2012. In 2011, it was $1.89 a pound, the highest since at least 2008. While demand for robusta jumped 15 percent in the 2011-12 season, usage of arabica coffee from top-grower Brazil slid 12 percent and consumption of arabica beans from other areas grew 1 percent, Volcafe Ltd. in Winterthur, Switzerland, estimates.