Robusta coffee gains most in two weeks

Robusta coffee gained the most in two weeks in London on concern a dry spell in Brazil may squeeze supply from the world's biggest grower.

The bitter-tasting robusta beans gained 2.5 per cent last week, amid speculation that dry weather in the main Brazilian growing states of Sao Paulo and Minas Gerais may damage crops. There are fears that the South American nation's crop won't be as high as expected because of insufficient rain, Nestor Osorio, the International Coffee Organisation's executive director, told reporters on September 28 in London.

"Coffee is being dragged along on the back of weather reports from Brazil,'' Jeff Cooper, an analyst at Ambrian Commodities in London, said in an interview today. "We're seeing light showers instead of heavy ones.''

Robusta for November delivery climbed as much as $76, or almost 4 per cent, to $1,990 a tonne on the Liffe exchange in London. That's the biggest intraday increase since September 17. It traded at $1,968 a tonne as of 10:16 am local time.

Fortis, Belgium's biggest financial-services company, on September 28 cut its forecasts for supply surpluses of arabica and robusta coffee because of stronger-than-expected demand.

The market for arabica beans, used by coffeehouse operators such as Starbucks Corp, will have a surplus of 1.49 million bags in 2006-07, the bank said in a joint report with VM Group. That's about 300,000 bags less than forecast in August.

The anticipated surplus for robusta beans, used to make espresso and instant coffee, was cut by about the same amount to 1.09 million bags.