By Isis Almeida
(Bloomberg) — The robusta coffee spread tumbled after Brazil’s instant-coffee makers abandoned a plan to bring back beans stored in other countries.
The premium of January contracts over March fell 44 percent to $20 a metric ton as of 12:09 p.m. in London. The process to repatriate robusta beans would take too long, according to Aguinaldo Jose de Lima, director of institutional relations at Abics, a group representing the soluble-coffee industry. If the move was successful, it would have lead to a drawdown in stockpiles certified by the exchange.
The coffee spread surged last week on speculation Brazil, the world’s largest producer of all coffee varieties, would allow imports to help instant-coffee makers squeezed by record prices. A second year of drought in Brazil’s robusta-growing areas has reduced output by 25 percent to the lowest since 2004.
Brazilian roasters will “have to continue to focus on higher volumes of lower-grade arabica coffees,” I&M Smith wrote in a online report.
Brazil will only consider allowing imports when coffee producers and the processing industry reach an agreement, said Neri Geller, the policy secretary at the Agriculture Ministry.
The producers’ lobby group National Coffee Council is reluctant to support the measure because it could hurt growers, it said Friday.
Growers in Vietnam, the top producer of robusta, have started delivering beans from the season that started last month. The weather remains favorable for bean drying and the first crop deliveries were seen last week, according to Volcafe, the coffee unit of commodities trader ED&F Man Holdings Ltd.
Robusta coffee for January slid 0.8 percent to $2,135 a ton. Arabica for March gained 0.7 percent to $1.6315 a pound on ICE Futures U.S. in New York.
In other markets:
* White sugar for March rose 0.5 percent to $538.40 a ton in London. The New York raw sugar contract gained 0.8 percent to
20.31 cents a pound.
* London cocoa for March slid 0.4 percent to 2,006 pounds
($2,483) a ton. Beans traded in New York gained 0.1 percent to
$2,428 a ton.
–With assistance from Fabiana Batista.
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