Coffee jumped to a two-month high in New York and the highest price since October in London on concern that reduced global production will tighten inventories. Cocoa declined.
The International Coffee Organization said that farmers in Africa, Central America and parts of Mexico will see “substantial falls” in output during the year that ends September 30. Production in Vietnam, the world’s second-largest grower, “also seems to have fallen,” the London-based trade group said on Thursday in a report.
“With growing world consumption, the replenishment of stocks may be limited,” Nestor Osorio, the group’s executive director, said in the report. “With high production costs, many coffee growers are finding it difficult to maintain investment for the upkeep and renovation of their coffee farms when price levels are not remunerative.”
Arabica-coffee futures for September delivery rose 2.45 cents, or 1.8 per cent, to $1.385 a pound at 10:43 am on ICE Futures US in New York, after reaching $1.393, the highest level since April 6.
On London’s Liffe exchange, robusta coffee for September delivery climbed $44, or 3.1 per cent, to $1,451 a tonne, after touching $1,457, the highest price since October 20.
In Central America, crops may face an increase in diseases and the “rapid development of parasites” because of tropical storm Agatha at the end of last month, the ICO said. The ailment may hurt production of arabica beans used by specialty companies including Starbucks Corp.
Vietnam
The outlook for Vietnam, the biggest producer of the robusta variety used in instant coffee and blends, “is not as great as we were hoping it to be” because of the lack of availability of credit to farmers, said Eldred Buck, the managing director of Eiger Trading Advisors Ltd. in London. “Yields are a bit low,” he said.
Global coffee output will be 120.6 million bags this year, down 5.8 per cent from a year earlier, the ICO said. Output next season is expected to be 133 million to 135 million bags, while consumption may be 134 million bags, the group said. A bag weighs 132 pounds, or 60 kg.
In New York, cocoa for September delivery slipped $9, or 0.3 per cent, to $2,983 a tonne on ICE. Cocoa for July delivery declined $16, or 0.6 per cent, to 2,544 pounds ($3,727) a tonne on Liffe.
