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Coffee Futures Advance on Lower Shipments From Brazil, Weaker DollarJuly 1st, 2008Coffee futures rose for the second straight day after exports from Brazil, the world's biggest producer, fell last month and a weakening dollar boosted demand for raw materials as a hedge against inflation. Shipments dropped 13 percent to 1.45 million bags in June from a month earlier, Brazil's Coffee Exporters Council said today in a preliminary report on its Web site. Economists predicted the European Central Bank will raise interest rates July 3, causing the dollar to fall further and making commodities traded in the U.S. less expensive for buyers using other currencies. ``A lot of people are focusing on how Brazil is doing,'' said Julio Sera, a trader at Hencorp Futures in Miami. ``Tighter and tighter supplies will create a bullish situation.'' Coffee futures for September delivery rose 2.15 cents, or 1.4 percent, to $1.5535 a pound on ICE Futures U.S., the former New York Board of Trade. Earlier, the price reached $1.558, the highest for a most-active contract since March 14. Coffee jumped 12 percent in the first half of this year, which ended yesterday, partly because harvest delays in Brazil's Sao Paulo and Minas Gerais states tightened global supplies. Brazil will harvest 51.1 million bags of beans this year, 36 percent more than last year, because trees are in the higher-yielding part of a two-year crop cycle, the U.S. Department of Agriculture has forecast. A growers' group said last week that no more than 8 percent of the country's beans were harvested through June 24, down from as much as 18 percent a year earlier. Weaker DollarSpeculation that the ECB will raise its main refinancing rate and cause the dollar to become even weaker also supported coffee prices today, said Fain Shaffer, president of commodity broker Infinity Trading Corp. in Medford, Oregon.``Everyone is keeping an eye on Thursday,'' Shaffer said. ``There's extra fund buying today because of that.'' Coffee was among the rising commodities including crude oil, sugar and gold that pushed the Reuters/Jefferies Commodity Price Index of 19 futures contracts as much as 1.3 percent higher. The dollar declined as much as 0.4 percent against an index of six major currencies before paring losses. Arabica beans, the main variety traded in New York, are grown mainly in Latin America and are used by specialty coffee companies including Starbucks Corp. Robusta beans, mostly traded in London, are used in instant coffee and are mainly grown in Asia, Brazil and Africa. A bag of coffee beans weighs 60 kilograms (132 pounds). - Yi Tian in New York at Bloomberg. Click here for your Free Coffee Futures Trading eGuide | |