Robusta Coffee Posts First Annual Decline Since 2003 on Supply

Robusta coffee posted its first annual decline since 2003 in London on speculation that increased production from growers in Asia and Africa will outpace consumption.

Coffee fell 9.8% this year as the robusta supply surplus expanded to 3.15 million bags in 2007-2008 from 1.63 million bags, according to Fortis estimates. More of the output may be headed for London as the Liffe exchange delists a five- metric-ton contract after next month for a 10-ton contract.

“The five-ton contract would only accept 30% of the world’s merchantable robusta coffee whereas the 10-ton should now accept 70%,” said Angus Kerr, owner of coffee trading company Coffee ag in Cobham, England.

The five-ton robusta coffee contract for January delivery fell $45, or 2.6%, to $1,720 a ton in London on Liffe. The drop this year compares with a 20% jump last year.

The beans still outperformed the 35% drop in the UBS Bloomberg CMCI Index of 26 commodities this year. Cocoa, up 71% this year, gained the most as supplies fall short of demand. Cocoa for March delivery increased 7 pounds, or 0.4%, to 1,781 pounds ($2,599) a ton.

The new coffee harvest in Viet Nam, the world’s largest grower of robusta beans used in instant coffee and espresso, was delayed “a few weeks” because of heavy rains in November, Fortis said in a report this month.

“Certainly the lateness of the crop in Viet Nam is helping whoever is squeezing the January five-ton contract because there’s less coffee available for it,” Kerr said.

Robusta climbed to $2,815 a ton, a 13-year high, in March as growers in Viet Nam held back supplies. Global robusta output will exceed demand by 4.49 million bags in the 2008-2009 season, according to Fortis. The coffee season starts Oct. 1 and ends Sept. 30. A bag weighs 60 kilogram (132 pounds).

White, or refined, sugar for March delivery gained $2, or 0.6%, to $318 a ton, for an annual gain of 1%, the first increase in three years. (Bloomberg)