Robusta coffee falls on Vietnam drought worries
LONDON - Prices of Robusta coffee fell Wednesday in London on speculation that farmers in Vietnam, the biggest grower of the beans, might sell stockpiles to buy water for their crops, which are suffering from dry weather.
Vietnam's coffee crop was damaged by several months of drought last year followed by heavy rains, helping Robusta prices gain 34 percent since midSeptember.
"Some market players are suggesting that in Vietnam pressure for growers to sell was mounting as dry weather in one of the main growing regions this week could force them to sell for cash to water coffee plants," Sucden, a London commodities broker, said in a report.
Robusta for delivery in May, the most active contract, fell as much as $8 to $1,218 a metric ton on London's Liffe exchange. It later recovered some of those losses, to close down $1 at $1,225.
Prices of Arabica coffee were up 0.35 cents at $1.1405 a pound.
Worldwide coffee exports fell 16 percent in January, led by a drop in Robusta shipments, the International Coffee Organization said Wednesday. The beans are used in instant coffee by companies like Nestlé and Kraft Foods.
Gold prices rose as investors preferred the metal to stocks and bonds. "Gold has come back into favor as an international currency," said Frank Lesh of Rand Financial Services in Chicago. "The uncertainty continues over interest rates. Gold is without the risk of each individual currency's region."
Gold for April delivery was up $1.90 at $565.80 an ounce in late trading on the Comex division of the New York Mercantile Exchange.
Crude oil prices rose after a government report showed that U.S. refineries shut units for maintenance, leading to reduced fuel output.
"There should be further closures in the weeks ahead, so there will be the need to withdraw from stockpiles," said Rick Mueller at Energy Security Analysis in the Netherlands. "These high inventory levels won't last through the spring." Crude oil for April delivery was up 56 cents at $61.97 a barrel on the New York Mercantile Exchange.
By Danielle Rossingh - Bloomberg - March 2, 2006.
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