Robusta Coffee Spread Gains to Record on Vietnam; Cocoa Retreats

By Isis Almeida  Dec 9, 2013 8:31

The premium robusta coffee for delivery in January commands over the March futures climbed to a record, signaling tightening supplies as shipments fall from leading producer Vietnam and stockpiles dwindle. Cocoa dropped.

The beans used to make instant coffee and espresso for January delivery climbed to as much as $49 a metric ton above the March futures, a record since the spread started trading in July 2012. Vietnam’s coffee exports fell in the past two months and robusta stockpiles in warehouses tracked by NYSE Liffe are at the lowest since at least 2002, data on Bloomberg showed.

“The spot month has been supported by limited flow of Vietnamese 2013-14 crop,” Andrea Thompson, head of research and analysis at CoffeeNetwork, a unit of brokerage INTL FCStone Inc., said by phone today from BelfastNorthern Ireland. “The Liffe certified stocks have been the main source of robusta stocks and they continue to decline.”

Robusta coffee for January delivery gained 2.1 percent to $1,758 a ton by 12:14 p.m. on NYSE Liffe in London. The spread between the January and March futures was trading at $45 a ton from $30 a ton a week earlier. That market structure, in which earlier-dated contracts are priced higher than deferred ones, is known as backwardation and may signal limited supplies.

Vietnamese coffee exports in October and November were just over 150,000 tons, down from 240,000 tons a year earlier, Volcafe, a unit of commodities trader ED&F Man Holdings Ltd., said in a Dec. 6 report. Bean stockpiles in Ho Chi Minh City increased during both months and carryover inventories in the hands of farmers were among the highest ever, the trader added.

Inventories in NYSE Liffe-tracked warehouses were 45,900 tons as of Nov. 25. That’s below the 52,000 tons a Bloomberg survey of 10 traders published in August forecast for the end of the year. The exchange will update inventories this week.

Arabica Consolidation

In New York, arabica coffee for delivery in March was 0.6 percent higher at $1.07 a pound on ICE Futures U.S. Futures trading volumes were about average for the past 100 days for the time of day, data compiled by Bloomberg showed.

“Arabica has started to consolidate, but this is more to do with spillover strength from robusta, where certified stocks are falling,” Kona Haque, an analyst at Macquarie Group Ltd. in London, said in a report e-mailed today. She forecast prices may drop to 90 cents a pound next year partly on supplies from Brazil, the world’s largest producer of all coffee varieties.

“With incremental roaster demand still skewed toward robusta, we recommend staying short arabica,” Haque said.

Refined, or white, sugar for March delivery rose 0.6 percent to $451.20 a ton in London. Raw sugar for March delivery was 0.9 percent higher at 16.74 cents a pound in New York.

Cocoa for delivery in March fell 0.6 percent to 1,752 pounds ($2,870) a ton on NYSE Liffe. Cocoa for delivery in the same month slid 0.4 percent to $2,793 a ton on ICE.