COMMODITIES : Fears of Shortage Keep Coffee Prices Perking
Coffee futures rallied for the fourth straight day Tuesday as reawakened fears of tightening supplies stirred New York’s Coffee, Sugar & Cocoa Exchange.
On other markets, copper futures prices gained following an extended string of losses, gold and silver futures fell, livestock and meat, energy, and grain and soybean futures were mixed.
Coffee futures settled 1.55 to 3.34 cents higher, with the contract for delivery in March at $1.4134 a pound, the first close above the psychologically important $1.40 level since Jan. 23.
The March contract has risen by 9.23 cents a pound, a gain of nearly 7%, over the past four sessions. The advance has been fueled partly by concerns about the tight availability of coffee for delivery against the March contract and partly by fears that a continuation of the sharp price decline witnessed during the last two weeks of January could trigger a cutback in producer shipments.
Could Cause Shortages
The International Coffee Organization, a price control group composed of the largest coffee producer and consumer countries, would be required to order a 1-million-bag reduction in exports of robusta coffee beans if an indicator based on the 15-day moving average of cash coffee prices falls to $1.20 a pound.
The indicator stood at $1.2259 at the close of business on Tuesday.
Although the indicator would have to drop even further before affecting shipments of the arabica coffee beans traded in New York, “it makes some people apprehensive that if the cut were imposed, it would lead to shortages,” said Arthur Stevenson, an analyst with Prudential-Bache Securities Inc.
The prospect of a general labor strike in Brazil, the world’s largest coffee producer, also contributed to the bullish tone. Brazil’s two major unions have scheduled a meeting on next Monday to set a strike date.
Copper futures surged on New York’s Commodity Exchange after falling sharply in five of the six previous sessions.
Analysts attributed the advance to technical factors and increased buying of actual copper.
Copper settled 1.15 to 2.60 cents higher, with March at $1.315 a pound.
Gold and silver futures slipped on the Commodity Exchange in reaction to the dollar’s gains against other major currencies and the continuing outlook for low inflation.
Gold settled $1.40 to $1.70 lower, with April at $395.50 an ounce; silver was 3.9 to 4.7 cents lower, with March at $5.89 an ounce.
Hog futures prices steadied on the Chicago Mercantile Exchange following Monday’s steep decline, but pork belly futures fell again on selling linked to an unexpected increase in hog slaughters.
Most cattle futures moved higher, boosted by strong cash markets.
Live cattle settled 0.22 to 0.45 cent higher, with February at 75.67 cents a pound; feeder cattle were 0.15 cent lower to 0.15 cent higher, with March at 84.50 cents a pound; live hogs were 0.40 cent lower to 0.28 cent higher, with February at 42.30 cents a pound, and frozen pork bellies were 0.22 cent to 0.92 cent lower with February at 38.60 cents a pound.
Among energy futures traded on the New York Mercantile Exchange, West Texas Intermediate crude oil settled 0.15 to 0.32 cent higher, with March at $17.70 a barrel; heating oil was 0.01 to 0.49 cent lower, with March at 49.87 cents a gallon, and unleaded gasoline was 0.04 cent lower to 0.52 cent higher, with March at 49.26 cents a gallon.
On the Chicago Board of Trade, soybean and corn futures advanced late in response to firmer cash prices for soybeans and soybean meal. Wheat finished narrowly mixed.
Wheat settled 2 cents lower to 1.75 cents higher, with the contract for delivery in March at $4.2725 a bushel; corn was 0.50 cent to 1.50 cents higher, with March at $2.67 a bushel; oats were 1 cent to 1.50 cents lower, with March at $2.14 a bushel, and soybeans were 1 cent to 3.50 cents higher, with March at $7.575 a bushel.
