Robusta coffee fell for a third day in London on Tuesday, after gaining for eight consecutive sessions, on speculation sales from Vietnam, the biggest producer of the variety, will increase as harvesting advances. Cocoa rose.
Robusta coffee gained 14 percent in the two weeks prior to this, with the March contract moving from being $10 a metric ton cheaper than the May futures on Feb. 8 to $164 a ton more expensive by the close on Feb. 15. The March premium over May vanished on Monday and the contract was at a discount of $10 a ton by 10:12 a.m. London time, data on Bloomberg show. Vietnam will harvest a record 21.5 million bags of coffee in the season started in October, Rabobank International estimates.
"The backdrop to this price correction is the expectation that Vietnam, the world's largest producer of robusta coffee, will step up sales," Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, wrote in a report e-mailed on Tuesday.
Robusta for May delivery slipped 1.2 percent to $1,963 a ton on NYSE Liffe in London. The March contract slipped 1.8 percent to $1,952 a ton. The price touched $2,174 a ton on Feb. 16, the highest since Sep. 13. Arabica coffee for May delivery climbed 0.3 percent to $2.0295 a pound on ICE Futures US in New York.
"The price slump signals that such a high price level simply will not be sustainable given the plentiful supply," Fristch said, adding that Vietnamese production would be 21.5 million to 22 million bags this season.
The rise in robusta prices in the last two weeks was supported by slower exports from Vietnam. The country shipped 6.2 million bags from October to January, down 25 percent from a year ago, Rabobank estimates. Exports plunged 48 percent in January alone, according to government data. A bag of coffee weighs 60 kilograms (132 pounds).
Robusta prices may ease further as production will rise in Brazil and Indonesia, Commerzbank said. Brazil is the world's largest coffee producer and second-biggest robusta grower. Indonesia is the third-biggest grower of the robusta variety, used in espresso and instant drinks.
"We therefore currently see no reason why robusta prices should exceed $2,000 a ton," Fritsch said.
Cocoa for March delivery rose 1.1 percent to 1,522 pounds ($2,407) a ton in London. Cocoa for May delivery was up 1.3 percent to $2,376 a ton in New York.
White, or refined, sugar for May delivery was little changed at $634.80 a ton on NYSE Liffe. Raw sugar for May delivery gained 0.8 percent to 23.96 cents a pound on ICE.