| NEW YORK, April 10
NEW YORK, April 10 The premium of arabica coffee
over the more bitter robusta bean soared to the highest level in
more than two years on Thursday, raising the likelihood that
some roasters will need to alter their highly secretive blends
to maintain profit margins.
"They may be forced to because of the looming tightness plus
quality issues," said Judith Ganes-Chase, president of J. Ganes
Consulting based in New York, referring to arabica coffee.
A January-February drought in the coffee belt in Brazil hurt
some of the arabica crop as it developed on the trees, though
the extent of the damage to both yield and quality is yet to be
Brazil grows roughly 40 percent of the world's arabica,
which forms the backbone of most major commercial blends used in
household names including U.S. Folgers maker J.M. Smucker Co
and Maxwell House maker Kraft Foods Group.
Concerns about reduced output from the drought, which was
followed by below-average rainfall, caused a jaw-dropping 85
percent spike in futures prices so far this year.
The benchmark arabica futures contract trading on ICE
Futures U.S. soared 4 percent to $2.0780 per lb at one point on
Thursday, the highest for the spot contract since February 2012.
Though robusta futures on Liffe were also firm, their
run-up this year has been a more modest 31 percent.
On Thursday, the premium of arabica over robusta KC-LRC1=R
soared nearly 8 percent to $1.09 per lb, the highest since March
Arabica coffee is typically roasted and ground for brewing
and can range widely in quality, with some reaching the highest
levels. Robusta, on the other hand, is typically less expensive
and more bitter and either processed into instant coffee or
added to a roasted blend to reduce the cost.
When arabica's premium vaulted near $1.90 per lb in May
2011, following an 11-month rally in arabica futures that caused
the market to double in price on supply concerns and speculative
buying, several roasters either increased their robusta usage in
existing blends or created new products using robusta.
(Reporting by Marcy Nicholson; Editing by Lisa Shumaker)