Money managers are the most bearish on robusta coffee in 15 months as speculation about increased supplies from Vietnam sent futures heading for the worst second quarter since 2009.
Managers were net-short, or betting on lower prices, by 2,209 futures and options as of May 28, the most since Feb. 7, 2012, NYSE Liffe data today showed. They had been net-long, or betting on higher prices, since Dec. 25.
The harvest in Vietnam, the world's largest grower of robusta used in instant coffee and espresso, may climb 4.9 percent to 1.5 million metric tons in the 12 months starting Oct. 1 as rain last month ended a drought in the nation's main growing region, a Bloomberg survey in May showed. Robusta futures fell 7.9 percent this quarter, heading for the biggest drop for the April to June period since 2009.
"The trigger has been the continually strong flow of exports from Vietnam," said Andrea Thompson, head of research and analysis at CoffeeNetwork, a unit of INTL FCStone Inc., in Belfast, Northern Ireland. "Fundamentally, there's no support for the market."
Futures dropped 1.8 percent this year to $1,889 a ton after climbing 6.3 percent last year. Prices may fall to $1,700 a ton, FCSTone said in a report today, without giving a timeframe. The Standard & Poor's GSCI gauge of 24 commodities is down 4 percent and the MSCI All-Country World of equities climbed 7.8 percent. A Bank of America Corp. Index shows Treasuries lost 1.2 percent.
Robusta coffee gained 6.6 percent in the first three months of the year as drought in Vietnam threatened to cut output. The beans led gains among the four agricultural commodities traded in London. In a March 15 Bloomberg survey, traders and shippers forecast Vietnam's coffee harvest would drop next season to 1 million tons, the lowest in eight years.
Since then, rain returned to Dak Lak, the country's main growing region, easing drought concerns. Most areas in the province will receive 50 millimeters (2 inches) to 90 millimeters of rain in the first 10 days of the month, the Meteorology and Hydrology Department said in e mailed report on June 1. In the first 10 days of 2012, rainfall recorded at the 10 stations monitored by the province's weather office average 39.33 millimeters.
In white sugar, money managers boosted bets on lower prices by 14 percent to 8,787 futures and options in the week ended May 28, NYSE Liffe data showed. They also reduced bets on higher cocoa prices by 4.2 percent to 41,105 contracts and trimmed bets on falling feed-wheat prices by 14 futures and options to 364 contracts.