Coffee Price Rises in N.Y. on Bets Recession Won't Cut Demand

Bloomberg) -- Coffee prices rose, erasing an earlier loss, on speculation slowing global economic growth may not reduce consumption.
Arabica coffee demand will rise 1 percent to 78.45 million bags in the year through September 2009 from the previous marketing year, Fortis Bank and VM Group said today. The arabica surplus will narrow to 4.47 million bags, down 6.75 million bags from a year earlier as Brazil, the largest grower, enters the less-productive period of a two-year cycle, the companies said.
``Everyone is going to continue to drink coffee,'' said Bill Adams, a managing director for JKV Global in Chicago. ``That's going to be supportive for prices.''
Arabica-coffee futures for December delivery gained 0.35 cent, or 0.3 percent, to $1.1135 a pound at 10:51 a.m. on ICE Futures U.S. in New York.
``The tendency in any consumer spending squeeze is for people to trade down, rather than entirely go without an item they have become accustomed to consuming, although that will obviously depend on individual circumstances and the severity of the downturn,'' according to the Fortis and VM Group report.
Futures were down 15 percent this month through yesterday. On Oct. 27 the most-active contract fell to the lowest since May 2007 as investors reduced stakes in commodities amid falling liquidity and speculation demand for raw materials would shrink.
In London, robusta coffee futures for January delivery fell $12, or 0.7 percent, to $1,598 a metric ton on the Liffe exchange.
Source : Bloomberg