Expected Increase in Production of Robusta Coffee Sends Futures Spiraling

By IVCPOST Staff Writer

Jun 03, 2013 11:29 AM EDT

Money managers are a little bit pessimistic on robusta coffee in 15 months as a projected increase in supply of coffee from Vietnam prompted its futures to plunge into its worst second quarter performance in four years.

According to Bloomberg, money managers are bearish on robusta coffee mainly because they were net-short by 2,209 futures and options. These figures, updated as of May 28, marked the most since Feb 7, 2012 as managers had been betting on higher prices since Christmas Day (December 25).

Vietnam, the world's largest producer of robusta coffee, is expected an increase in harvest in 12 months after a series of rain showers last month that provided perfect cultivating ground following a drought in the country's rural area. Vietnam's robusta coffee production is set to increase 4.9 percent to 1.5 million metric months in 12 months starting October 1.

As a result, robusta futures took a nosedive by 7.9 percent in the second quarter - its biggest fall for the April-June period since 2009.

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