Coffee Rises as Roasters Gear Up for More Demand; Sugar Drops

By Claudia Carpenter

Sept. 19 (Bloomberg) -- Coffee rose in London as roasters made purchases to meet increased demand for hot beverages during the colder winter months in the Northern Hemisphere. Sugar fell.

Layton Ferns & Co., a Hampshire, England-based roaster that grinds coffee for prisons and universities in the U.K., only makes money in the winter season, Chairman John Saywell said. ``We always gear up about this time of year. Crisp, cold days are perfect coffee days.''

Robusta coffee for November delivery increased $15, or 0.7 percent, to $2,077 a metric ton as of 12:55 p.m. in London on the Liffe exchange. Prices have dropped 3.4 percent this week.

Vietnam, the biggest grower of robusta beans used to make instant coffee and in espresso, plans to open the country's first exchange for coffee by December to boost trading, Luong Van Tu, chairman of the Vietnam Coffee and Cocoa Association, said.


The Buon Me Thuot Coffee Exchange Center will be in Dak Lak, the main growing area, starting off with actual coffee contracts and later futures contracts, he said.

Robusta beans make up 30 percent of sales at Layton Ferns, Saywell said. The company started in 1893 and moved out of London in 2001.

``We're lucky because we're not dealing with large firms in the city,'' he said. ``I think recession is going to hit both.''

The number of new job vacancies in the City of London fell by 34 percent in August compared with the same month last year and declined 20 percent from July, according to U.K. recruitment consultant Morgan McKinley. The period was before Lehman Brothers Holdings Inc. filed for bankruptcy reorganization and Bank of America Corp. agreed to buy Merrill Lynch & Co.

White Sugar

White, or refined, sugar for December delivery dropped $3.90, or 1 percent, to $378.10 a ton. Even with news yesterday that Malaysia bought 2.7 million tons of raw sugar from five trade houses, ``the market is still struggling to find a base,'' Nick Penney of Sucden (U.K.) Ltd. in London wrote in a report today. The sugar was bought at about $386 a ton (17.50 cents a pound), including cost and freight, Reuters reported yesterday.

Raw sugar for March delivery rose 1.3 percent to 13.64 cents a pound, before freight costs, on the ICE exchange in New York.

Cocoa for December delivery gained 5 pounds to 1,517 pounds ($2,728) a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net