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Coffee Climbs on Brazilian Supply Concerns


By Elizabeth Campbell and Chris Kay
Bloomberg

September 23, 2010

Coffee futures climbed on concern that a lack of rain will reduce crop prospects in Brazil, the world’s largest producer. Sugar and cocoa gained.

Brazil had dry weather since April and needs rain this month as coffee trees start flowering to produce beans for next year’s harvest. In the seven days starting Sept. 30, as much as 200 millimeters (7.9 inches) of rain may fall, said Expedito Rebello, the head of research at the government’s Meteorology Institute, known as Inmet.

“We had a dry weather pattern which was very, very worrisome for some people,” said Rodrigo Costa, the vice president of institutional sales at Newedge USA LLC in New York.. “The market is waiting for a confirmation that we’re going to see rains in a regular way that usually takes place from October on.”

Arabica coffee for December delivery advanced 0.7 cent, or 0.4 percent, to $1.8065 a pound at 10:16 a.m. on ICE Futures U.S. in New York. Before today, the commodity jumped 32 percent this year.

Robusta-coffee futures for November delivery gained $18, or 1.1 percent, to $1,714 a metric ton on NYSE Liffe in London. Earlier, the price reached $1,727, the highest level for a most- active contract since Aug. 24.

“Unrest persists on the coffee market,” Commerzbank AG said in a report. “We are seeing daily changes in the key estimates of the impact of the drought in Brazil and whether the forecast rainfall will be enough to prevent substantial damage to the crops.”

Brazil Forecast

Brazil may harvest 47.2 million bags this year, more than last year’s 39.5 million bags, as trees entered the higher- yielding half of a two-year cycle, the Agriculture Ministry’s forecasting agency said on Sept. 9.

Crops in Brazil may be hurt by hail next week as a cold- weather front approaches major producing regions, Inmet’s Rebello said.

Refined-sugar futures for December delivery rose $3, or 0.5 percent, to $610 a ton in London. Raw-sugar futures for March delivery rose 0.05 cent, or 0.2 percent, to 23.24 cents a pound in New York.

Cocoa futures for December delivery gained $23, or 0.8 percent, to $2,785 a ton in New York.

In London, cocoa futures for December delivery was little changed at 1,887 pounds ($2,960) a ton.
--
With assistance from Katia Cortes in Brasilia. Editors: Patrick McKiernan, Daniel Enoch
To contact the reporters on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net; Chris Kay in London at ckay5@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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