Coffee Falls in London on Brazilian Supply; Cocoa, Sugar Gain

By Rachel Graham

Aug. 6 (Bloomberg) -- Robusta coffee fell in London on speculation that exports from Brazil, the world's biggest grower, will accelerate. Cocoa and white sugar advanced.

Brazil will produce 51.1 million bags this year, 36 percent more than last year, because trees are in the higher-yielding part of a two-year cycle, the U.S. Department of Agriculture estimates. A bag of beans weighs 60 kilograms (132 pounds).

``Brazil is going to offer the most leverage in the next couple of weeks,'' Abah Ofon, an analyst with Standard Chartered Plc, said by phone from Dubai. ``There's quite a bit of supply in the market right now, we are looking for coffee prices to move moderately down.''

Robusta for September delivery fell $43, or 1.8 percent, to $2,381 a ton on the Liffe exchange in London. Prices have advanced 25 percent this year, extending four consecutive years of higher prices.

Global coffee production may rise 15 percent to a record 139.7 million bags in the year that begins Oct. 1 because of increased Brazilian and Vietnamese supply, German researcher F.O. Licht said July 8.

White, or refined, sugar for October delivery added $3.50, or 0.9 percent, to $390.50 a ton in London. Sugar has risen 24 percent this year, partly on speculation rising crude-oil prices will spur demand for cane-based ethanol.

``We remain bullish on sugar,'' Ofon said. ``We expect more cane to be used in ethanol.''

Brazil's sugar and ethanol industry association, or Unica, said last week it may spend more than $1 million to challenge a U.S. tax on imported ethanol at the World Trade Organization.

Cocoa for September delivery gained 21 pounds, or 1.4 percent, to 1,491 pounds ($2,913) a ton.

Crop diseases may cost Indonesian cocoa farmers an estimated 3.5 trillion rupiah ($388 million) this year in production losses. As much as 300,000 hectares (741,000 acres) of cocoa farms on Sulawesi island, which accounts for four-fifths of the country's production, are affected, said Bayu Krisnamurthi, a deputy to the Coordinating Ministry for Economic Affairs.

To contact the reporter on this story: Rachel Graham in London rgraham13@bloomberg.net.