Robusta Coffee Rebounds in London as Roasters Replenish Stocks

By Marianne Stigset

Aug. 7 (Bloomberg) -- Robusta coffee in London rebounded from yesterday's drop as investors and roasters took advantage of lower prices to add to holdings. Cocoa and sugar gained.

Robusta coffee rallied from yesterday's 2.6 percent slide. The UBS Bloomberg CMCI Index of 26 raw materials has slipped 4.6 percent this week on signs of weakening global economic growth and demand from industry for raw materials.

``The short-term funds were pushed and had to get out but then industry has come in to buy at lower levels,'' said Angus Kerr, owner of Coffee ag, a trader in Cobham, England.

Robusta for September delivery rose $15, or 0.6 percent, to $2,377 a metric ton as of 1:38 p.m. on London's Liffe exchange. The beans have gained 25 percent this year, outperforming the 14 percent advance in the CMCI Index.

Arabica coffee futures for September delivery climbed 1.4 percent to $1.398 a pound on ICE Futures U.S.

Crude oil rose for the first time in four days today and the dollar fell from near a seven-week high against the euro, further buoying coffee, Kerr said. A weaker U.S. currency makes dollar-denominated commodities cheaper to buy for those holding other monies.

Coffee shipments from Brazil, the biggest producer and exporter, fell 10 percent in July from a year earlier, the country's Coffee Exporters Council said yesterday.

Brazil last month shipped 2.03 million bags of the commodity, including instant coffee, compared with 2.26 million bags a year earlier, according to the council, known as Cecafe. A bag weighs 60 kilograms (132 pounds).

Arabica Exports

Exports of mild-tasting arabica beans fell 15 percent to 1.48 million bags in July, while shipments of the robusta variety expanded 33 percent to 277,581 bags.

Global coffee exports fell in June from a year earlier as the two main producing countries, Brazil and Vietnam, reduced shipments, the International Coffee Organization said July 31. Exports in June declined to 8.28 million bags from 8.35 million bags a year earlier, the London-based ICO.

Among other agricultural commodities, white, or refined, sugar for October delivery advanced $4.70, or 1.2 percent, to $400.60 a ton.

Output in Brazil's Center South region, the biggest cane- growing area, fell 11 percent this year through July 16 as heavy rains reduced sucrose levels and cut yields, according to Unica, the country's sugar-cane industry association. Brazil used 60 percent of its harvest for ethanol in the period, up from 56 percent a year earlier, Unica said.

Sugar Yields

``Sugar prices have benefited from expectations of a declining global surplus due to lower yields in key producers Brazil and India, as well as from the perception that globally, more cane will be used for ethanol over the coming years,'' Abah Ofon, a commodities analyst with Standard Chartered Plc, wrote in a report today.

Ofon expects raw sugar to average 14 cents a pound in the last two quarters due ``in part to only moderate international demand for Brazilian ethanol.'' Raw sugar traded up 0.1 percent today at 13.95 cents a pound in New York.

Cocoa futures for September delivery rose 9 pounds, or 0.6 percent, to 1,493 pounds ($2,908) a ton on Liffe.

To contact the reporter on this story: Marianne Stigset in London at mstigset@bloomberg.net