Funds Swing to Bullish on Robusta Coffee Amid Dryness Concerns

  • Money managers are net-long for the first time since August
  • Dry weather reducing crop potential in Vietnam, Indonesia

Speculators are bullish on robusta coffee for the first time in almost nine months as dry weather threatens crops in Vietnam and Indonesia, two of the largest producing countries.

Money managers were net-long 9,413 futures and options contracts as of May 10, according to a report published by ICE Futures Europe on Monday. A week earlier, they were net-short 1,144 contracts, after holding a bearish position since the week ended Aug. 25.

Futures have climbed almost 10 percent this year in London, and touched $1,686 a metric ton on Monday, the highest since August. Output in Vietnam, the top grower of the robusta variety used in instant coffee, may fall to a four-year low next season of 1.5 million tons, according to a Bloomberg survey of eight traders and analysts released last week. The harvest in Indonesia, the third-largest producer, may slide 10 percent to 570,000 tons, a separate survey showed.

"Concerns linger over robusta availability,” the International Coffee Organization said in an e-mailed newsletter. "Reports of drought in several robusta-growing regions have spurred speculation over potential shortages."

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