Cocoa Falls as Gbagbo Orders Companies to Export; Coffee Drops

March 10 -- Cocoa fell the most in more than two months in London after President Laurent Gbagbo ordered companies to export beans from Ivory Coast, the world’s largest producer. Coffee dropped.

Companies were told to export by the end of this month, or face sanctions, according to Ahoua Don Mello, spokesman for Gbagbo’s government. Gbagbo refuses to leave office and took control of local cocoa purchases and exports three days ago, escalating a conflict with rival Alassane Ouattara, the internationally recognized winner of a November election.

“The market is a bit overbought in the near term, and a correction was needed,” Connor Noonan, an analyst at Castlestone Management Ltd. in London, said in an e-mail today. “This, coupled with Gbagbo announcing that he was going to export yesterday, has taken some of the initial fear of shortages out of the market.”

March export coffee drops: Uganda

* March exports seen at 180,000 bags
* Bad weather weighs on production

KAMPALA, - Uganda, Africa's second-biggest coffee exporter, expects sales to drop 17 percent in March compared with a year ago as the season tails off and due to poor weather, a source at the industry regulator said on Wednesday.

The east African grower exported 217,809 60-kg bags in March 2010 and could sell 180,000 bags this month, the fourth such drop in sales in a row, an official at the Uganda Coffee Development Authority (UCDA) said.

coffee output to 133.7m bags

LONDON, - World 2010-11 coffee output has been revised slightly lower to 133.7 million 60-kg bags, but will still comfortably exceed the previous year, the International Coffee Organisation said in its monthly update on Wednesday.

The revised figure compares with the ICO's previous 2010-11 estimate of 134.8 million 60-kg bags and 2009-10 estimated output of 123.1 million 60-kg bags.

While supply is expected to rise, coffee prices remained underpinned by a shortage of high quality beans.

Coffee markets traded at mutli-year highs on Wednesday, partly due to several lower than average crops from key high quality bean producer Colombia.

Guatemala says coffee buying halts on high prices

GUATEMALA CITY,  Guatemala coffee growers said Wednesday the local coffee market was at a virtual standstill as exporters refused to pay record-breaking coffee prices, and farmers were being hit by high margins in the futures markets.

"In Guatemala and internationally the coffee market is paralyzed, exporters have suspended their buying," national growers association Anacafe said in a statement.

A lack of liquidity to buy coffee at prices which are hovering around three-decade highs and slow buying by international roasters were behind the halt, according to the statement.

"Before, international buyers financed positions in the futures markets at the contracted price," Anacafe said. 

"Now, it is practically impossible to take advantage of this mechanism because the coffee producers have to come up with the funds to maintain these positions."

Arabica coffee futures rose to a 34-year high on Wednesday and looked poised for further gains, boosted by both chart-based buying and supportive fundamentals.

May arabica coffee on ICE stood 3.90 cents or 1.4 percent higher at $2.9110 per lb at 1217 GMT after peaking at $2.9120, a 34-year high for the benchmark second month.
 

But Anacafe said exporters are offering to buy coffee at prices below market and recommended producers not sell their coffee until negotiating a better deal.
 

"For Guatemalan coffee producers, selling their coffee at this price is an unattainable illusion," Anacafe said.

In February , Colombia coffee exports up 12 pct

* Colombia expects output at 9-9.5 mln this year

* Arabica futures trading at 34-year highs

Colombia's coffee exports rose 12 percent to 659,000 60-kg bags in February versus a year earlier, while output grew 18 percent to 764,000 sacks in the same month, the country's coffee federation said on Wednesday.

Colombia, the world's top producer of high-quality washed Arabica, is expected to see coffee production this year reach at least 9 million 60-kg bags, the highest level since 2008, as better weather helps flowering, the federation says.

"The recovery of the coffee crop in Colombia during the last months of 2010 and the first months of 2011 is a consequence of favorable climatic conditions in the first quarter of last year," the federation said in a statement.

COFFEE & COCOA CLOSE REVIEW

* Liffe May robusta coffee ends up $95 at $2,557 a tonne after earlier rising to a three-year high for the second month of $2,586. Run-up in coffee prices led by ICE arabicas which surged to a fresh 34-year peak on Wednesday.
 
* Liffe May cocoa ends down 61 pounds at 2,259 pounds a tonne. Rally in cocoa prices driven by conflict in top grower Ivory Coast appears to have temporarily lost momentum.
 
* Liffe May white sugar falls $12.00 to close at $751.10 a tonne. Market remains range-bound, turning lower after failing to breach resistance at the upper end of the current trading band. *****

COFFEE AND COCOA FORECAST FOR TODAY & MARKET CLOSE RIVIEW , 9March 2011

U.S. arabica coffee futures hurtled to a 34-year top Wednesday and looked poised to charge higher, boosted by investment fund buying and slim supplies.

Cocoa futures retreated further from last week's 32-year peak but remained propped up by civil war in top grower Ivory Coast, while sugar edged down in range-bound business.

ICE's May arabica coffee futures soared 7.65 cents to close at a 34-year settlement peak at $2.9485 a lb, having also hit a 34-year intra-day top at $2.9665.
 

It was the third day in a row that arabica futures hit a 34-year high and the market appears to have posted its biggest three-day advance since December.