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Coffee Falls Most in 2 Months as Vietnam Crop Output Improves
By Marianne Stigset and Shruti Daté Singh
Nov. 17 (Bloomberg) -- Coffee fell the most since September on speculation that newly harvested supplies from Vietnam, one of the world's largest producers, will ease a shortage that sent prices to a nine-month high yesterday.
The Vietnam Coffee & Cocoa Association is forecasting a 26 percent increase in the current crop season, to 870,000 metric tons. Prices are up more than 20 percent in London and New York during the past four months as world inventories fell to a record low and drought damaged Vietnam's previous crop.
``Vietnam is expecting a big crop this year and shipments are already under way, even though it's mainly going to industry,'' said Ralph Hawes, head of coffee trading at Sucden (U.K.) Ltd. in London. ``There are no great fears being reflected in the market structure right now.''
Coffee for January delivery fell $96, or 6.1 percent, to $1,466 a metric ton on London's Euronext.liffe, the biggest decline since Sept. 18. Coffee for March delivery fell 3 cents, or 2.5 percent, to $1.1795 a pound on the New York Board of Trade, the biggest drop for a most-active contract since Oct. 2.
Coffee had reached a seven-year high of $1,653 a ton in London on Nov. 9 and a nine-month high of $1.2475 a pound in New York Nov. 16.
``We've been screaming on the upside,'' said Raymond Keane, a coffee trader at Balzac Bros. & Co. in Charleston, South Carolina. ``We were due for a correction.''
More Vietnam Coffee
The decline in London came on speculation coffee output in Dak Lak, Vietnam's biggest coffee-producing province, will rise 20 percent to 300,000 tons in the crop year that began Oct. 1, Nguyen Van Sinh, deputy director of the provincial agriculture department said last week.
Vietnam was tied with Columbia as the second-largest coffee producer after Brazil in 2005, according to the International Coffee Organization.
New York ``sure didn't get any help from London,'' said Jack Scoville, a vice president at Price Futures Group in Chicago. ``We ran into profit-taking there from the speculators and some producer selling from Colombia.''
Opening stocks in exporting countries for the crop year starting October will be 18.9 million bags, the lowest ever, the ICO said.