By Danielle Rossingh
Jan. 2 (Bloomberg) -- Robusta coffee rose to the highest in more than a month in London, extending a four-year rally, on speculation Brazil will produce less than some analysts previously forecast. Cocoa climbed and sugar fell.
Farmers in Brazil, the second-biggest producer of robusta, may grow 50 million bags of coffee this season, Fortis Bank SA/NV and VM Group said on Dec. 19. A forecast expected on Jan. 8 from the Brazilian Agriculture Ministry may be 47 million bags, Price Futures Group in Chicago said last week.
With the prospects of a reduced crop, ``some funds are saying `Let's join the bandwagon','' Jeff Cooper, an analyst at Ambrian Commodities Ltd., said today in London. This is ``helping robusta,'' he said.
Coffee for delivery in March, the most active contract on London's Liffe exchange, rose $32, or 1.7 percent, to $1,939 a metric ton, the highest since Nov. 30.
The beans, used in espresso and instant coffee, climbed 20 percent last year. The UBS Bloomberg Constant Maturity Commodity Index of 26 commodities jumped more than 21 percent, its sixth consecutive annual gain.
Arabica coffee for March delivery dropped 1.7 percent to $1.339 a pound as of 12:41 p.m. local time on ICE Futures U.S., formerly known as the New York Board of Trade.
``More rain'' would benefit the budding trees in Sao Paulo and Minas Gerais, Brazil's main coffee-growing regions, U.S. weather forecaster Meteorlogix LLC wrote in a report yesterday.
Long Positions
Africa Tea Brokers Ltd., operator of the world's biggest tea auction in the Kenyan port city of Mombasa, and the Nairobi Coffee Exchange suspended sales because of violence following a disputed national election.
Coffee auctions in Nairobi were postponed until Jan. 15, the coffee exchange said in an e-mailed statement. Kenya is Africa's fifth-biggest coffee exporter, according to the International Coffee Organization. Ethiopia is the biggest.
At least 300 people have been killed in Kenya, East Africa's biggest economy and the world's largest black-tea exporter, since the Dec. 27 election.
Hedge-fund managers and other large speculators increased their net-long positions in New York coffee futures in the week ended Dec. 25, according to U.S. Commodity Futures Trading Commission data.
Speculative long positions, or bets prices will rise, outnumbered short positions by 44,212 contracts on ICE Futures U.S., the Washington-based commission said on Dec. 28. Net-long positions rose by 1,722 contracts, or 4 percent, from a week earlier.
New Flavor
``Commodities are still flavor of the month,'' Cooper said. ``The year-end book-squaring is done. The funds can now release some fresh money in the new year,'' he said.
``The next 5 to 10 years, commodities will be the markets to invest in,'' said Cooper. ``That's because of shortages, such as in acreage.''
Coffee exports from India, which sells 80 percent of its output overseas, fell 11 percent last year after pest attacks and excessive rain reduced the harvest.
Companies, including units of Nestle SA, shipped 223,565 metric tons in 2007, compared with 250,980 tons a year earlier, according to provisional data compiled by the state Coffee Board.
Cocoa for March delivery rose 25 pounds, or 2.4 percent, to 1,068 pounds ($2,115) a ton, the highest close since Dec. 21. The chocolate ingredient gained almost 18 percent last year, after dropping 2.5 percent in 2006.
Cocoa, Sugar
Demand for the chocolate ingredient may rise 3.3 percent to 3.69 million metric tons in the 2007-08 season, Fortis said Nov. 19.
A strike at the Ivory Coast Coffee and Cocoa Bourse and other industry bodies continued for a fourth day, preventing registration of cocoa shipments for export, Reuters reported. Ivory Coast is the world's biggest cocoa grower, accounting for 40 percent of world output.
White sugar for March delivery, the most active contract, slid $2, or 0.6 percent, to $313 a ton. Sugar slumped 8 percent last year, its second straight annual decline.
Raw sugar futures traded on ICE Futures U.S. fell 0.9 percent to 10.71 cents a pound.
``London has roughly followed New York's fall,'' Nick Penney, a trader with London-based commodities broker Sucden (U.K.) Ltd., said in a report today.
Following are technical gauges for robusta coffee:
20-day moving average 1856.6
100-day moving average 1980.7
200-day moving average 1856.2
14-day relative strength index 46.294
Fibonacci Start End 50% 38.2%
1449 2495 1972 1849
To back test technical gauges {BTST}
To contact the reporter on this story: Danielle Rossingh in London at drossingh@bloomberg.net
