Coffee Futures Jump to 13-Year High in N.Y. on Supply Concern
By Debarati Roy
Bloomberg
October 26, 2010
Coffee futures rallied to a 13-year high in New York on concern that global supply will be tight.
Output from the next crop in Brazil, the world’s biggest producer, may drop to 36 million bags, the lowest in four years after a drought hindered flowering, the nation’s coffee council said on Oct. 22. Costa Rica lowered its output estimate by 3.5 percent for the season that began this month, Reuters reported, citing the head of the coffee association.
“First Brazil and now Costa Rica, everyone is lowering their estimates,” said Tom Mikulski, a senior market strategist at Lind-Waldock, a broker in Chicago. “People are concerned about the supply of better-quality coffee.”
Arabica coffee for December delivery gained 0.7 cent, or 0.3 percent, to $2.012 a pound at 11:56 a.m. on ICE Futures U.S. in New York. Earlier, the commodity rose to $2.046, the highest level since August 1997.
Mikulski said he expects prices to reach $2.10 a pound.
In London, robusta-coffee futures for January delivery rose $5, or 0.3 percent, to $1,868 a metric ton on NYSE Liffe.
Arabica is grown mainly in Latin America and brewed by specialty companies including Starbucks Corp. Robusta beans, used in instant coffee, are harvested mostly in Asia and parts of Africa.
A bag of coffee weighs 60 kilograms, or about 132 pounds.
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Editors: Daniel Enoch, Millie Munshi.
To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net
To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net
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