Sept. 16 (Bloomberg) -- Coffee prices rose, extending a rally to the highest level in a month, on concern that output will decline in Colombia, the world’s third-largest producer. Orange juice also gained.
Production in Colombia may drop to around 10 million bags this year from 11.5 million in 2008, after excessive rainfall delayed harvesting, the Colombian National Coffee Growers Federation said last week. As of yesterday, cash prices of arabica beans in Colombia, the second-biggest grower of the variety, jumped to the highest since Aug. 14.
“The sheer fear of a smaller Colombian crop” will drive prices higher, said Nicholas S. Hayman, a senior trader at LaSalle Futures Group in Chicago. “Coffee is absolutely in a bullish trend.”
Arabica-coffee futures for December delivery rose 0.65 cent, or 0.5 percent, to $1.3525 a pound at 9:45 a.m. on ICE Futures U.S. in New York. Earlier, the price reached $1.364, the highest for a most-active contract since Aug. 14.
Before today, coffee jumped 20 percent this year, partly on lower exports from Central America and Colombia. A smaller crop in Brazil, the largest producer, compounded the strain on global supplies.
In July, Colombian exports slumped 32 percent to 608,000 bags from 892,000 a year earlier. A bag weighs 60 kilograms (132 pounds).
Arabica coffee is grown mainly in Latin America and brewed by specialty companies including Starbucks Corp. Robusta beans, used in instant coffee, are harvested mostly in Asia and parts of Africa.
On ICE, orange-juice futures for November delivery climbed 0.9 cent, or 0.9 percent, to 95.95 cents a pound after surging 5.7 percent yesterday.
Before today, the price gained 40 percent this year amid forecasts for a smaller Florida crop. The state trails only Brazil in orange production.
