UN Secretary-General Ban Ki-moon called Monday for an urgent Security Council meeting on Ivory Coast following reports of illegal arms deliveries to one of the warring factions there.
"The secretary-general hopes that the Security Council will consider convening urgently a meeting to discuss this issue," a spokesman for Ban said.
The appeal follows reports that three attack helicopters and related materiel from Belarus were being delivered to Yamoussoukro to forces led by outgoing president Laurent Gbagbo.
The first delivery arrived reportedly on a flight which landed late Sunday, and additional flights are scheduled for Monday, the spokesman said.
"This is a serious violation of the embargo against Côte d'Ivoire (Ivory Coast) which has been in place since 2004," the spokesman said.
"The secretary-general demands full compliance with the arms embargo and warns both the supplier of this military equipment and Mr. Gbagbo that appropriate action will be taken in response to the violation."
Ivory Coast has been gripped by increasing unrest since a presidential poll on November 28, which much of the international community acknowledges was won by opposition leader Alassane Ouattara.
Cocoa futures on ICE rose to a 32-year high on Monday as fears of civil war in top producer Ivory Coast increased after fighting intensified over the weekend, dealers said.
Raw sugar futures advanced as the market eyed Monday's expiry of the March raws contract on ICE <SBH1 while arabica coffee were also higher.
Broadcasts of Ivory Coast's state television went down across the main city on Sunday after a transmitter was damaged in fighting between forces loyal to incumbent leader Laurent Gbagbo and rival groups.
May cocoa on ICE rose $31 or 0.85 percent to a peak of $3,670 tonne by 1220 GMT.
The European Union has imposed sanctions on Gbagbo and people and institutions helping him stay in power after a November election he is widely recognised to have lost to presidential claimant Alassane Ouattara.
The institutions include the cocoa authorities and ports.
A halt to cocoa-buying in Ivory Coast because of sanctions and liquidity problems has spurred smuggling of cocoa through neighbours like Ghana, farmers say, as the alternative is to let it rot on farms.
"At the moment there's at least some movement of cocoa across borders," a London-based broker said, adding this could cease if civil war broke out.
Exporters estimated only around 1,000 tonnes of beans were delivered to the West African state's two ports between Feb. 22 and Feb. 27, down from 9,003 tonnes in the same week a year ago.
Dealers said the market remained well underpinned at current levels.
"There's no natural selling in the market right now, the market goes up very easily," the broker said.
May cocoa on Liffe rose 4 pounds or 0.2 percent to 2,372 pounds a tonne.
MARCH RAWS EXPIRY
Sugar prices were higher with the market's focus on Monday's expiry of the March contract on ICE with deliveries expected to total about one million tonnes.
March raws was up 0.38 cent or 1.2 percent at 31.90 cents a lb with its premium to May roughly stable in the run-up to expiry at about 2.80 to 2.85 cents.
The market's improved performance during the last couple of sessions was seen boosting the technical outlook.
"New York sugar futures rose above their steep downtrend Friday, opening upside potential," Brenda Sullivan, technical analyst at Sucden said.
Sugar prices have fallen by around 12 percent since hitting a 30-year high of 36.08 cents a lb on February 2.
May whites on Liffe rose $7.30 or 1.0 percent to $733.70 a tonne.
Arabica coffee futures were also higher with the market beginning to resume its uptrend after a setback during the second half of last week. May arabica coffee on ICE rose 4.10 cents or 1.5 percent to $2.7190 per lb.
The contract peaked at $2.7840 per lb last Tuesday, the highest level for the benchmark second month since 1977, but corrected lower on Wednesday and Thursday before stabilising on Friday.
"This may suggest short-term consolidation and even slight gains, but the daily indicators still show the risk for another test lower," Sucden's Brenda Sullivan said.
May robusta coffee futures on Liffe rose $46 or 2.0 percent to $2,385 a tonne.
Coffee continues to hover near the contract highs and is worthy of put accumulation at these levels. Cocoa is at a fresh contract high as well and is rallying on fears of a sustained export ban in the Ivory Coast. This is a truly historic opportunity to get short cocoa as a top is anticipated and the downside fallout could be monumental. Cotton is making another attempt, its 3rd since the initial breakout rally, of reversing a sharp selloff to hit fresh highs. I do not believe cotton has it in it to make another major move higher, but then again I did not suspect that had it in it to rally last month either. Sustained buying is occurring because of a real shortage of supply, and if real delivery is needed then epic short covering and price surges have little choice but to happen and run until the buying demand is exhausted. When will the buying demand be exhausted? I believe there is a real likelihood that the high is already in and this current attempt to rally will be met with strong selling well below 208 on the futures. OJ continues to make new highs but is fast approaching critical resistance at 190. If broken the market has little technically stopping a run to the 2007 highs of 210.
* Coffee market edges higher underpinned by tight supplies
* Sugar market eyes Monday's expiry of March raws on ICE
Cocoa futures on ICE rose to close at a 32-year high Friday as rebels seized a town in top grower Ivory Coast, while raw sugar rebounded ahead of the March contract's expiry Monday. Coffee prices rose after a two-day setback.
The United Nations Secretary General said Ivory Coast was closer to the brink of a new civil war after rebels controlling the north seized a town in government territory and were heading south.
"Of course the instability in the Ivory Coast is the main reason for the push up," said Derrick Lewis, a senior trader with brokerage Cleartrade Commodities in Chicago.
May cocoa on ICE rose $14 to finish at $3,639 per tonne, the highest settlement since January 1979, after touching a session high at $3,650. This widened the premium of May to $66 compared with July from $65 on Thursday.
The contract has risen about $600, or 28 percent, since early January as the crisis in Ivory Coast has deepened. Volume, however, was thin at about 8,500 lots, down about 60 percent from the 30-day average.
"Until the situation is settled, there's concern about supply," Lewis said, referring to the reason for the premium.
The sterling-based Liffe contract was also higher with May < closing up 18 pounds at 2,368 pounds a tonne, after hitting the highest for the second position since July 2010 at 2,377 pounds.
"Most of the people that we speak to are now leaving the country because it's too dangerous," a European trader said, adding the country's cocoa industry was at a standstill.
POSITI DIFFICULT ON
"The (cocoa) trade is in a difficult position, on the one side (presidential claimant Alassane) Ouattara wants them to continue to buy from the farmers because they need the money, on the other Gbagbo says keep exporting because he needs the money," plus there's EU sanctions in place, the trader said.
Raw sugar futures were higher with the market's focus on Monday's expiry of the March contract.
The nearby premium closed at 2.78 cents a lb, widening from 2.39 cents at the close on Thursday, with the decision by Russia earlier this week to cut import tariffs seen increasing the appetite to take delivery.
May raw sugar futures jumped 0.91 cent or 3 percent to finish at 28.74 cents per lb while May white sugar on Liffe rose $21.40 to finish at $726.40 per tonne.
Arabica coffee futures on ICE were higher as the market began to creep back up towards Tuesday's peaks which were the highest levels seen in 34 years at $2.7840 per lb, basis May.
The market suffered its weakest two-day performance in a month on Wednesday and Thursday with the setback seen largely as a technical correction after its prolonged advance and as investors got out of their long positions.
May arabica coffee rose 3.15 cents to finish at $2.6780 per lb, in an inside day. A shortage of high quality arabica coffee from Colombia, suffering from several consecutive smaller crops, has fueled the coffee rally and a drawdown of stocks.
"The funds are very heavily long so a bit of a wash out could be on the cards but I am not sure we will see a calamitous collapse as stocks remain so low," said a London-based broker.
May robusta coffee gained $10 to finish at $2,339 a tonne as dealers noted a pick-up in exports from top robusta producer Vietnam.
Vietnam's February coffee exports rose around 16.9 percent from the same month in 2010 to 90,000 tonnes, or 1.5 million bags, in line with market expectations, and could offer some relief to tight markets.
* Liffe May cocoa ends up 18 pounds at 2,368 pounds a tonne after earlier hitting 2,377 pounds, the highest level for the benchmark second month since July 2010. Market supported by fighting in top grower Ivory Coast which has raised the prospect of a return to open war.
* Liffe May robusta coffee <LRCc2> ends up $10 at $2,339 a tonne. Market supported by renewed strength in arabica market although a rise in exports from Vietnam helped to cap gains.
* Liffe May white sugar <LSUc1> rises $21.40 to close at $726.40 a tonne. Market remains extremely volatile in the run-up to Monday's expiry of the March raw sugar contract on ICE.
* World-wide purchases to total 13.65 mln 60-kg bags
* Nestle to buy 1.2 million bags in Colombia in 2011
Nestle , the world's biggest food maker, expects to buy 1.2 million 60-kg coffee bags from Colombia this year, little changed from 2010, the company said on Thursday.
Colombia, the world's No. 1 producer of high quality washed Arabica beans, has had two years of lower coffee output due to bad weather, pests and a tree renovation program, but expects a slight recovery of bean output this year.
"Right now with the conditions we have, I don't think that (purchases) will grow much," said Ricardo Piedrahita, Nestle's supply chain director for Colombia.
Colombia will provide about 9 percent of the firm's total bean purchases this year, which are expected to total 13.65 million 60-kg bags, Nestle said.
Colombia's coffee federation said on Thursday that coffee production this year was expected to reach at least 9 million 60-kg bags, the highest level since 2008, as better weather helps flowering. [ID:nN24251937]
Fiona Kendrick, Nestle's senior vice president of beverages, said the firm expected to purchase 819,000 tonnes of coffee worldwide in 2011, a 5 percent increase from the 780,000 tonnes purchased last year.
"We obviously look to buy our coffee accordingly to the origins that we require for our needs ... Growth is very good at approximately 5 percent," Kendrick told Reuters on the sidelines of a press conference held in Bogota.
Climate change affected coffee plantations throughout Colombia in 2010 as abrupt moves from drought to strong rains caused the appearance of roya and other fungi, according to the government's agriculture institute.
About 300,000 hectares (741,300 acres) of the total 900,000 coffee hectares were hit by roya prompting growers to cut trees planted with the varietal Caturra -- which has high production and good quality but is not resistant to roya -- and replant.
To support Colombia's growing production and purchases, Nestle along with the coffee federation launched a $3.17 million program to help growers plant trees resistant to pests and apply environmental friendly practices.
The plan calls to distribute 50 million resistant tree varietals by 2020. This year, they will distribute 4 million castilla trees, a varietal resistant to roya and renovate 727 hectares of coffee land, they said.
With the plan, Nestle expects to double the amount of coffee it buys directly from farmers and their associations over the next five years, the company said.
The Andean country produced 8.9 million bags last year and 7.8 million in 2009. In 2008, it produced 11.1 million bags, about its historic annual average
* Appeals court panel sees no imminent injury to Kraft
* Starbucks to go ahead with new partner March 1
* Judges affirm Jan. 28 lower federal court ruling
NEW YORK, Feb 25 (Reuters) - The final legal obstacle was removed to Starbucks Corp <SBUX.O> ending its coffee distribution agreement on March 1 with Kraft Foods Inc <KFT.N> by a U.S. appeals court ruling on Friday.
A three-judge panel of the U.S. Court of Appeals for the 2nd Circuit in New York affirmed a lower court ruling of Jan. 28, denying Kraft's request to stop Starbucks from moving ahead with its plan to use a new partner to distribute packaged coffee to supermarkets in North America and Europe.
The business between the world's largest coffee chain and North America's largest packaged food maker brings in $500 million a year in revenue -- and whether or not Starbucks must pay fair market value to end the deal will be decided in arbitration in the coming months.
"We conclude that Kraft has failed to show that it faces an actual and imminent risk of injury that cannot be compensated by money damages," said the written ruling by the panel, which heard 20 minutes of oral arguments on Friday.
The panel said the U.S. District Court "did not abuse its discretion" by denying Kraft a preliminary injunction. "We have considered Kraft's remaining arguments and find them to be without merit."
Kraft said it would put up a "vigorous defense" of its rights in arbitration.
"The Second Circuit did not rule on the fundamental issue of whether Starbucks can exit our contract without paying the fair market value, plus a premium," Kraft general counsel Marc Firestone said in a statement. "That question will be decided in arbitration."
In January's ruling from the bench, Judge Cathy Seibel in White Plains, New York, had noted that Starbucks could end up owing Kraft "a boatload of money" if an arbitrator decided the coffee chain breached a 1998 agreement with Kraft.
Lawyers for Kraft argued in both courts that it would suffer "irreparable harm" if Starbucks went through with its plan to move distribution to privately held Acosta Inc on March 1.
Starbucks welcomed the appeals panel's affirmation of the lower court's decision.
"With yet another failed attempt by Kraft to use any means to further confuse our mutual customers behind us, we now look forward to the smooth transition of the business to Starbucks on March 1," spokesman Alan Hilowitz said in a statement.
The two companies are in arbitration. Starbucks said Kraft had repeatedly breached the agreement, under which Kraft distributes Starbucks coffee to an estimated 40,000 grocery stores and other retailers in all 50 U.S. states and Canada, as well as in Britain and Europe.
The cases are Kraft Foods Global Inc v Starbucks Corp, U.S. District Court, Southern District of New York, No. 10-09085 and No. 11-389-cv in the U.S. Court of Appeals for the 2nd Circuit in New York. (Additional reporting by Lisa Baertlein and Martinne Geller; Editing by Bernard Orr and Matthew Lewis)
SAN JOSE, Costa Rica, Costa Rica said on Thursday it expected its 2010/11 coffee harvest to rise as much as 5.4 percent above last year's crop after damages from heavy rains proved to be less serious than originally thought.
Costa Rica was battered by heavy rains last year after the beginning of the harvesting season in October, raising fears of serious damage to the country's high-quality coffee crop.
But Ronald Peters, director of the country's national coffee institute known as Icafe, told Reuters the 2010/11 harvest would come in between 1.55 million and 1.57 million 60-kg bags, a jump from the 1.49 million produced last season.
Peters said nearly 80 percent of Costa Rica's crop already has been sold as arabica coffee prices hover arround three decade highs.
source: https://portal.hpd.global.reuters.com/site/applist.aspx
* Colombia sees 2011 coffee output at 9-9.5 mln bags
* Rains in Costa Rica less damaging than first thought
Colombia, Mexico and Costa Rica on Thursday all boosted this year's coffee production outlooks, which may help ease supply concerns that have lifted arabica coffee prices to near three decade highs.
Colombia, the world's top producer of high-quality washed arabica beans, is expected to reach at least 9 million 60-kg bags, the highest level since 2008, as better weather helps flowering, the country's coffee federation said.
A shortage of arabica coffee from Colombia, suffering from several consecutive smaller crops, has fueled the coffee rally and a drawdown of stocks.
ICE arabica futures have doubled in price over the past eight months and surged on Tuesday to the highest level in more than 30 years at $2.7840 per lb. But coffee prices fell back on Thursday in its weakest two-day performance in a month on investor liquidation.
"News from Colombia regarding the health of the crop has been encouraging but the market will prefer to see this in physical stocks," said Abah Ofon, analyst at Standard Chartered Bank.
Dealers said coffee roasters have been increasing the use of cheaper robusta coffee in their blends where possible.
"It helps to give them a bit of breathing room," said Bill Raffety, senior analyst for futures brokerage Penson Futures in New York, referring to Colombia's higher crop forecast.
The Andean country produced 8.9 million bags last year and 7.8 million in 2009. In 2008, it produced 11.1 million bags, about its historic annual average.
POOR WEATHER
Adding to the breathing room, was a forecast by Mexico's national coffee association of 2010/11 production at 4.2 million 60-kg bags, in line with output last season.
Coffee exports from Mexico -- a major arabica producer -- have fallen this year from last, raising concerns about the possibility of a smaller crop.
"We don't think the harvest could drop significantly (compared to last year)," Rene Avila, an operations coordinator at the national coffee association Amecafe, told Reuters.
Avila said while the crop would not be significantly smaller than last year, it is coming in more slowly due to unfavorable weather in Mexico's No. 2 coffee growing state of Veracruz.
Frosts in the central states of Hidalgo, San Luis Potosi and Puebla may have damaged the quality of some beans but overall volume is not expected to fall.
"With these prices, producers are not leaving a single bean on the trees," Avila said.
Roasters are filling orders for high-quality coffee from Costa Rica, known for its top-end coffee, with nearly 80 percent of the country's crop already sold, said Ronald Peters, executive director of Icafe.
Costa Rica had originally seen its coffee harvest dropping this year on heavy rains after the beginning of the harvest season in October, but now says the damage was not as bad as originally expected.
The country now sees 2010/11 output at between 1.55 million and 1.57 million 60-kg bags, a 5.4 percent jump from last season, Peters said.
"Luckily, we lost only half of what we thought was damaged (by the rains)," he added.
Prolonged adverse weather conditions and flooding had trimmed coffee production, and also has hurt output in robusta bean producers Indonesia and Vietnam.
Colombia's federation says that with more favorable weather, advances in the rejuvenation program and adequate fertilization, Colombia could reach its official production target of 14 million 60-kg bags in around three years.
Vietnam's February coffee exports rose around 16.9 percent from the same month in 2010 to 90,000 tonnes, or 1.5 million bags, in line with market expectations, and could offer some relief to tight markets.
The country's coffee shipments last month were revised up to 145,300 tonnes, or 2.42 million bags, an increase of 3 percent from January 2010, the General Statistics Office said on Friday. It had previously estimated January shipments to be 140,000 tonnes.
Coffee exports between October 2010 and February, the first five months of the 2010/2011 season, were estimated to reach 8.75 million bags, up 5 percent from 8.33 million 60-kg bags shipped a year ago, the office said.
Higher exports from Vietnam could help relieve concerns over robusta supply after Vietnam's rival producer Indonesia said its 2011 crop could drop 30 percent from an estimated 600,000 tonnes last year as rains damage cherries. [ID:nL3E7DO0J9]
Traders had forecast coffee exports this month at between 80,000 and 90,000 tonnes. [ID:nHAN535950]
The coffee crop year in Vietnam, the world's second-largest producer after Brazil and ranks the largest in robusta production, lasts between October and September.
The government estimated the coffee export revenues in January and February soared 47 percent from a year ago to $462.8 million, suggesting an average price of $1,967 a tonne, from $1,414 in the first two months of 2010.
Coffee is the country's second-largest agro-product export item in terms of value, after rice.
Roasters and funds have switched to buying robusta in recent months as washed arabica beans remain in short supply.
Liffe May robusta coffee <LRCc2> ended down $39 at $2,329 a tonne on Thursday, after rising to the highest levels in nearly three years earlier this week. [ID:nLDE71N2DW]
FARMERS HOLDING BACK SALES
A trader in Daklak, Vietnam's key coffee growing province, said this week exporters and foreign traders were keeping 400,000 tonnes, or 6.67 million bags, in warehouses for loading.
It was not clear how much of the exporters' current stock could be used for sales, apart from the beans already committed for loading.
But excluding foreign buyers' and exporters' stocks, Vietnam may still have nearly 4 million bags for sales, based on a median output forecast of 18.3 million tonnes in a Reuters poll on Jan. 27.
Robusta prices in Vietnam hovered near record highs earlier this week, with farmers continuing to hold on to remaining thin stocks on hopes of further gains, traders said.
Adapted from https://portal.hpd.global.reuters.com/site/applist.aspx
Chocolate lovers face the prospect of having to tighten their belts after the price of cocoa soared to a 12-month high yesterday.
Cocoa futures for the March delivery market reached US$3,311 (Dh11,059) per tonne, their highest level since last January, as an export ban on cocoa in Ivory Coast rattled world markets.
The rise in the price of cocoa beans follows a year that saw rapid rises in food prices worldwide.
The UN Food and Agriculture Organisation's index of food prices rose 19.1 per cent last month compared with December 2009. The index averages staple products including meat, dairy products, cereals and sugar, but excludes chocolate.
Chocolate makers in the region said the increase in price would hurt their income in the fast-growing confectionary market.
"Of course we are not happy about the increase, unfortunately there is not much that can be done," said Tina Memic, the retail manager at Bateel International, a Saudi-based maker of gourmet chocolates and dates. "We had to accept the price increase, as we are not willing to compromise the quality of chocolates we offer."
UAE residents are expected to consume 9,069.5 tonnes of chocolate sweets this year, an increase of 5.5 per cent on last year, according to Euromonitor, the market research company. Sales of chocolate confectionary rose 12 per cent last year to an estimated Dh817 million.
The price rise comes as Ivory Coast imposed an export ban on cocoa beans in the latest gambit to unseat Laurent Gbagbo, who has refused to leave the presidency in the face of pressure from the international community.
On Sunday, the government of the president-elect Alassane Ouattara sent a letter to leading cocoa exporters asking them to stop overseas shipments for one month.
The country accounts for about 40 per cent of global cocoa exports, and export revenues from the trade go into the National Coffee and Cocoa Management Committee, which Mr Gbagbo controls.
"Last week we had a meeting with the main cocoa exporters in Ivory Coast and they have agreed to suspend exports for a month," Malick Tohe, an adviser to Mr Ouattara's government, told Bloomberg.
Rob Simmons, the head of coffee and cocoa research at LMC International, the agriculture consultancy, said the export ban would have a huge effect on the world cocoa trade. "You're fairly limited in where you can get sources from," he said.
However, he added that despite the current rise in cocoa prices, the bean had proved remarkably more stable than other commodities during the past year, largely due to a small surplus of production worldwide.
Cocoa "was quite badly hit by the recession and demand took a big hit", he said.
Some increase in demand had been seen, Mr Simmons said, which was "primarily western consumers coming back, but in the background we do have some demand from emerging markets which didn't really stop".
Brazil was emerging as a big market for powder chocolate, while some Asian markets and Saudi Arabia had also increased demand for cocoa beans.
JAKARTA, Feb 24 (Reuters) - Indonesian coffee bean production in 2011 will fall by 30 percent from an estimated 600,000 tonnes in 2010, as rains in key producing areas damage cherries, an industry association official forecast on Thursday.
Lower output from Indonesia, the world's second largest robusta producer, will support global robusta prices that climbed to a 2-1/2 year high this week following tight supplies and strong price gains for arabica coffee.
"Rains in southern Sumatra have caused coffee flowers and young cherries to rot and fall from trees. Production will be lower this year," Rachim Kartabrata, executive director of the Indonesian Coffee Exporter Association, told Reuters.
The London-based International Coffee Organization forecast earlier this month that the 2010/2011 crop in Indonesia, the world's third-largest producer after Brazil and Vietnam, said output would fall 16.5 percent this year to 9.5 million bags, unchanged from their previous forecast in January.[ID:nHAN187315]
Arabica prices eased on Wednesday, after trading at the highest level in at least 30 years the previous day as a shortage of high quality beans struggles to keep pace with demand. [SOF/L]
Indonesia's main harvest in southern Sumatra may not peak until May-June because of the extreme weather, said Azis Chan Satib, spokesman of the association's Lampung branch.
"The weather has been unpredictable. Cherries are not ripening properly because of extreme changes between rains and hot weather," said Satib.
Robusta coffee bean output from southern Sumatra island is expected to fall by 30 percent this year, compared to 420,000 tonnes in 2010, he said.
Robusta -- used in instant coffee -- mostly grows in Lampung, Bengkulu, and South Sumatra provinces on Sumatra island accounts for about 85 percent of Indonesia's coffee production. The rest is higher value aromatic arabica coffee.
Source: (Additional reporting by Mas Alina Arifin in Bandar Lampung; Editing by Neil Chatterjee) ((Fitri.Wulandari@thomsonreuters.com)(+62213846364)(Reuters Messaging: fitri.wulandari.reuters.com@reuters.net))
* Harvest delay in No. 2 producing state slows exports
* Frost may have damaged quality of some beans
MEXICO CITY, Feb 22 (Reuters) - Mexico sees its 2010/11 coffee crop at around 4.2 million bags, flat compared to last season's harvest, although delays in the harvest are slowing exports and frosts may have damaged the quality of some beans.
"We don't think the harvest could drop significantly (compared to last year)," Rene Avila, an operations coordinator at the national coffee association Amecafe told Reuters.
Exports have been slowing from Mexico, a major arabica producer, raising worried about a smaller coffee crop. Tight global arabica supplies have pushed coffee prices <KCc2> recently to their highest levels in more than three decades.
But Avila said while the crop would not be significantly smaller than last year, it is coming in slower due to unfavorable weather in Mexico's No. 2 coffee growing state of Veracruz.
"It is very clear that in some parts of Veracruz the harvest is delayed. It didn't rain enough and then it was cold at the beginning of the harvest which means the cherries ripen much slower," Avila said.
Coffee trees flower and produce cherries that are picked and processed into coffee beans for export.
In the first four months of the 2010/11 coffee season, which began in October exports from Mexico dropped more than 25 percent.
Coffee consumption is increasing in Mexico, which could also be contributing to the recent decline in exports, but in March production could pick up, Avila said.
In the central states of Hidalgo, San Luis Potosi and Puebla, which produce around a quarter of Mexico's coffee, ripening cherries were hit by a cold snap that might have hurt the quality of the beans, Avila said.
"The frosts could have affected quality, not necessarily the volume of total production because the cherries had already been formed," he said.
Last year the same states were hit by unusually cold weather that cut production and the trees are still recovering from those losses he said.
* Colombia sees 2011 coffee output at 9-9.5 mln bags
* Country suffered two years of below average production
* January production soared 76 percent vs year ago
BOGOTA, Feb 24 (Reuters) - Colombia's coffee production this year is expected to reach at least 9 million 60-kg bags, the highest level since 2008, as better weather helps flowering, the country's coffee federation said on Thursday.
Colombia, the world's top producer of high-quality washed arabica, has experienced lower-than-average output for the past two years due to bad weather conditions and a program to replace aging trees with younger, more productive ones.
The Andean country produced 8.9 million bags last year and 7.8 million in 2009. In 2008, it produced 11.1 million bags, about its historic annual average.
"What are we seeing? That probably we will pass production of last year and should reach a range of around 9 million to 9.5 million. But we have to wait and see because in farming precise figures are always an adventure," national coffee federation director Luis Genaro Munoz told reporters.
Benchmark May arabica coffee futures <KCc2> fell 3.70 cents, or 1.4 percent, to $2.6575 per lb, dropping for the second straight day on long liquidation as commercial buying appeared to have dried up. This drop follows Tuesday's surge to the highest level in more than 30 years at $2.7840 per lb.
"This just adds another needle to the haystack in terms of the weakening sentiment we're starting to see here, in the short term," said Luis Rangel, vice president for commodity derivatives with ICAP North America in Jersey City.
The coffee federation in the past has set production forecasts only to whittle them down through the year to lesser targets. Last year Colombia fell just short of its annual target of 9 million bags, after originally forecasting output at as much as 12 million bags.
SEASONAL PRESSURE
Arabica coffee futures trading on ICE Futures U.S. are also beginning to feel seasonal pressure and long liquidation after attracting speculative interest that lifted the market to the highest in more than 30 years earlier this week, dealers said.
"In the short-term the market is experiencing too much speculative interest at the higher levels and not enough commercial demand," Rangel said. "The risk is that speculators continue to drive the prices higher."
ICE arabica futures have doubled in price over the past eight months in a rally triggered by fund buying and sustained by concerns about global tight supplies of washed beans.
"It helps to give them a bit of breathing room," said Bill Raffety, senior analyst for futures brokerage Penson Futures in New York, referring to Colombia's higher crop forecast.
Prolonged adverse weather conditions and flooding had trimmed coffee production and also has hurt output in robusta bean producers Indonesia and Vietnam.
The federation says that, with more favorable weather, advances in the rejuvenation program and adequate fertilization, Colombia could reach its official production target of 14 million 60-kg bags in around three years.
January production soared 76 percent to 908,000 bags from a year ago as better weather helped Colombia recover to its historic monthly output levels.
But, while weather has improved, analysts have warned that rising oil prices could affect fertilizer costs, and force farmers to use less of the chemical.
The federation is also trying to replace aging trees with new ones that are more resistant to roya fungus.
Colombia has replaced around 70,0OO hectares (173,000 acres) of trees a year since it began rejuvenation and reached 80,000 hectares (198,000 acres) in 2010. This year the federation expects to replace 100,000 hectares (247,000 acres) of old trees under the project.
Source”: (Additional reporting by Marcy Nicholson in New York, writing by Patrick Markey; Editing by Walter Bagley) ((pat.markey@reuters.com, +57-1-634-4090, Reuters messaging:
* Cocoa slips from peak but outlook remains bullish
* Arabica coffee also retreats from multi-year high
* Raw sugar rebounds as crude oil surges
NEW YORK/LONDON, Feb 24 (Reuters) - ICE cocoa futures closed quietly lower after building in a bit more of a risk premium and hitting a 32-year high on Thursday as tensions mounted over supplies from top producer Ivory Coast.
Arabica coffee futures finished lower in its weakest two-day performance in a month, falling from the highest level in more than 30 years on investor liquidation.
Sugar futures, however, bounced after Wednesday's losses, feeling a lift from the strong crude oil futures market. Sugar is used to make biofuel.
The cocoa sector in Ivory Coast has been sucked into a post-election power struggle that threatens to reignite civil war, as terrified residents fled shooting in an Abidjan neighborhood and fighting erupted in Ivory Coast's west.
"If demand increases against the current backdrop in Cote d'Ivoire (Ivory Coast), then markets could rally further," Abah Ofon, analyst at Standard Chartered Bank, said.
ICE May cocoa <CCc2> inched down $6 to settle at $3,625 per tonne, after touching $3,645, the highest since January 1979.
The market remained in backwardation, when nearby contracts are more expensive than deferreds, typically indicating supply tightness or concerns. The May premium a $65 compared to July <CCN1>, slightly wider than $64 Wednesday.
"I think (the risk premium) is now fully into the market so the question now is where do we go from here," one veteran U.S. cocoa dealer said.
"A lot of the shorts have no money in the market right now. They've been selling, selling, selling and the market's been going against them, so you start to worry about the health of the shorts in the market."
Liffe May cocoa <LCCc2> finished down 7 pounds 2,350 pounds per tonne, having earlier hit a 7-month high of 2,368 pounds per tonne. The May premium closed at 76 pounds, from 83 pounds on Wednesday.
Coffee prices fell, with arabicas slipping well below the peak of $2.784 a lb hit on Tuesday, the highest level in over 30 years, as investors liquidated long positions after follow-through buying faded away,
dealers said.
ICE May arabica coffee <KCc2> dropped 4.80 cents or 1.8 percent to close at $2.6465 per lb. Liffe May robusta coffee <LRCK1> finished down $39 at $2,329 per tonne.
Total open interest fell to a one-year low at 125,045 lots on Feb. 23, down 1,283 lots from the previous day, ICE data showed.
A shortage of high quality arabica beans has fueled the coffee rally, after key producer Colombia saw several consecutive smaller crops, causing a drawdown of stocks.
Colombia's coffee production this year is expected to reach at least 9 million 60-kg bags, the highest level since 2008, as better weather helps flowering, the country's coffee federation said.
"News from Colombia regarding the health of the crop has been encouraging but the market will prefer to see this in physical stocks," Ofon said.
Dealers said that coffee roasters have been increasing the use of cheaper robusta coffee in their blends where possible.
MORE REALISTIC SUGAR PRICES
ICE raw sugar bounced after Wednesday's sell-off, as dealers eyed expiry of the March contract <SBH1> on Monday, and as the strong crude oil market helped lift prices. Sugar can be processed into the alternative energy source ethanol.
Oil surged to 2-1/2-year highs near $120 a barrel as the revolt in Libya choked exports, then eased as Saudi Arabia assured European refiners the kingdom could step in to fill any supply shortfalls. [O/R]
ICE most-active May raw sugar contract <SBK1> rose 0.47 cent to end at 27.83 cents per lb, after hitting a session low at 26.90 cents, the lowest since Dec. 30, 2010.
Liffe May white sugar <LSUK1> ended up $2.40 at $705 per tonne.
"After the market fell yesterday, we are at more realistic levels. There has been a lack of physical offtake," said a London-based sugar futures dealer.
Sugar futures were also supported by news that the European Union has ditched plans for a reduced-duty tendering process for sugar imports, in favor of a fixed 300,000-tonne import quota with duties set at zero.
* ICE sugar and ICE coffee in cents per lb, ICE cocoa, Liffe sugar and
Liffe coffee in dollars per tonne. Liffe cocoa in pounds per tonne.
Violence is escalating in Ivory Coast as an armed group claimed responsibility for its first attack on government troops in the commercial capital, Abidjan.
The Liberation Movement of the Population of Abobo-Anyama said 27 people were killed in the assault late on Feb. 22. The army put the figure at eight, including one soldier and seven people it described as rebels.
The attack by the group, which is named after two neighborhoods of Abidjan that support President-elect Alassane Ouattara, represents a new twist in violence that has marked the world’s top cocoa producer since a disputed election on Nov. 28 left it with two rival administrations. While the international community recognizes Ouattara as the winner, incumbent President Laurent Gbagbo refused to resign, citing alleged voter fraud.
Security forces returned to Abobo yesterday afternoon in a large-scale operation, residents said.
“Police came into the neighborhood around 4 p.m.,” Ladji Soumahoro, who lives in Abobo, said by phone yesterday. “They were firing everywhere. Everybody was scared, they stayed at home, scared of being hit by a random shot.”
Mediation Attempt
An African Union-sponsored mission to Ivory Coast, including the presidents of South Africa, Tanzania, Mauritania and Chad, completed a two-day visit to the country on Feb. 22.
The mission could be the “final attempt” by the regional bloc for a peaceful resolution to the crisis, said Kenyan Prime Minister Raila Odinga, who tried at least twice previously to mediate in the impasse.
The Economic Community of West African States is holding planning meetings and “marshaling forces” to remove Gbagbo from power if sanctions and talks fail to convince him to step down, Odinga told reporters yesterday in Nairobi, the Kenyan capital.
“If all these measures don’t result in a change of regime, force will be used,” he said. “As to when, I cannot say.”
At least 300 people have been killed in clashes since the political struggle began almost three months ago, according to the United Nations. In the west of the country, Amnesty International estimates 70,000 people have fled their homes amid ethnic tensions that have been exacerbated by the impasse.
The country’s financial system has come under increasing pressure as at least 10 lenders have closed their doors. The West African regional central bank ordered lenders to halt transactions with its agencies in Ivory Coast after Gbagbo seizer their offices.
Cocoa Ban
Ouattara, who on Jan. 23 told cocoa and coffee shippers to halt exports for a month, this week extended the ban until March 15. May-delivery cocoa climbed for the fourth straight day in London yesterday, adding 19 pounds, or 0.8 percent, to 2,357 pounds per metric ton.
In the 14 days to Feb. 17, exports of cocoa beans and processed cocoa products fell to 8,645 tons, according to an official with access to the data. In the two weeks previous, shipments were 71,457 tons, said the official, who declined to be identified because the data are confidential.
