Coffee Futures Rise on Brazil Damage Estimate
Undated (AP) _ Coffee futures prices rose in volatile trading Wednesday after the Brazilian government reported worse damage from two recent freezes than traders expected.
Prices initially surged, then fell back to finish with a relatively modest gain. Analysts said traders were afraid to keep much money in the skittish market.
″People are throwing their hands up in the air and saying they don’t know which way this thing is going to go,″ said Merrill Lynch analyst Judith Ganes.
On other commodity markets, crude oil futures rose; pork bellies plunged; cattle futures rose; precious metals advanced; and most grains and soybeans fell.
The Commodity Research Bureau’s index of 21 commodities rose 0.06 point to 232.58.
Green arabica coffee beans for September delivery rose 2.85 cents to $2.1095 a pound on New York’s Coffee, Sugar & Cocoa Exchange.
The contract jumped more than 11 cents to $2.19 a pound early in the session in reaction to a Brazilian government report released after the close of trading Tuesday that said more than 40 percent of next year’s coffee crop was destroyed by two recent frosts. Brazil is the world’s largest coffee producer.
The government said Brazil lost 11 million of the 26.5 million 132-pound bags originally estimated for next year. Brazil is now expected to harvest 15.5 million bags.
Coffee futures had fallen in recent sessions on rumors the damage would not exceed 10 million bags. Prices hit an eight-year high of $2.74 a pound July 13.
Prices should rebound this fall as colder tempertures boost coffee consumption in the Northern Hemisphere and prompt fresh buying by roasters, analysts said.
But in the near term, ″a lot of people feel the market is due for a bigger correction,″ said John Schimelpfenig, president of Maxor Trading Co., a coffee trading firm in New York. Some expect a drop to as low as $1.90 a pound, he said.
Crude oil futures rebounded from a two-day slide on the New York Mercantile Exchange as a 3-week-old oil workers strike in Nigeria appeared to be having a stronger effect on supplies.
Shell Oil delayed some Nigerian crude shipments because of the strike.
The declaration was not startling, but it helped bolster prices amid rumors, denied by Shell, of an explosion at its terminal in Forcados.
″This is a rumor-oriented market and it’s going to be driven by such as occurred today,″ said Tom Curtis, director of energy trading for Pegasus Econometric Group in New York.
Light sweet crude oil for September delivery rose 25 cents to $19.46 a barrel; August heating oil climbed 0.40 cent to 50.39 cents a gallon; August unleaded gasoline rose 0.75 cent to 57.91 cents a gallon; September natural gas fell 2.5 cents to $1.843 per 1,000 cubic feet.
Frozen pork belly futures tumbled to a two-year low on the Chicago Mercantile Exchange as burdensome supplies weighed on the market. Pork bellies are used to make bacon.
Hog futures also weakened. Cattle futures rallied despite lower cash cattle prices. Analysts linked the buying to technical factors.
August live cattle rose 0.25 cent to 68.42 cents a pound; August feeder cattle were unchanged at 79.07 cents a pound; August live hogs fell 0.27 cent to 46.10 cents a pound; August frozen pork bellies fell 1.93 cents to 29.07 cents a pound.
Soybeans led most grain futures lower on the Chicago Board of Trade after the government reported larger U.S. stocks of soybean oil than traders expected.
September wheat fell 1 cent to $3.32 a bushel; September corn fell 1 cents to $2.17 1/4 a bushel; September oats fell 1/2 cent to $1.15 a bushel; August soybeans dropped 4 1/4 cents to $5.85 a bushel.
In precious metal trading on the Commodity Exchange in New York, August gold rose 60 cents to $387.70 a troy ounce; September silver rose 4.7 cents to $5.372 a troy ounce.