Tea, coffee and cocoa prices increase this week

Tea, coffee and cocoa prices increase this week

LONDON (AFP): Tea, coffee and cocoa prices bubbled over this
week, as dealers feared supplies of our favorite pick-me-ups
would slow to a trickle in the weeks ahead.

Any British dealer will tell you that to make a fine brew, you
need a decent splash of water: the same is true of tea bushes
themselves, which need a thorough soaking if they are to
flourish.

Kenya's high plains have suffered a scorching drought of late
and the green leaf tips have turned tinder dry. The east African
country, which is one of the main suppliers of high grade teas to
the London auction houses, has slashed supply.

Kenyan output has dried up at a time of year when two other
key producer countries, India and Sri Lanka, do not normally
export large quantities of tea to the overseas market.

Fears that coffee and cocoa supplies would fall short of
drinkers' needs for the rest of the year also sent the price of
these two tropical commodities through the roof.

Gold: brighter. Gold brightened a little, with prices gaining
two to three dollars to US$353 per ounce, although market
sentiment remains very subdued.

The Swiss National Bank, which last week worried investors by
announcing it would sell some gold to finance a foundation for
helping Holocaust victims, tried to calm them by stating that the
gold sales would not begin before 1999.

The market is still nervous, however, mainly because of the
prospect of a rise in U.S. interest rates and a fresh
strengthening of the dollar, which would be bad for gold.

Nickel: tumble. Nickel prices dropped off the highs seen last
week and fell by $100 dollars to about $8,080 per ton.

The market was put on tenter hooks by the threat of strike
action at Russia's giant Norilsk plant, the biggest producer in
the world, which might shut down from April 2.

Tin: float. Tin prices rose by $155 to $6,065 per ton after a
fall of 420 tons in LME reserves to 9,290 tons.

Oil: rise. Oil prices rose because of technical buying, after
a period of weakness. The price of Brent North Sea crude oil,
which is used as a benchmark for oil prices in much of the world,
gained 60 cents to $20.20 per barrel.

The markets were not influenced by a rise in US crude stocks.
The rebound in prices, some analysts commented, is a reflection
of strong demand.

The fact that prices have not fallen as low as some had feared
in past weeks also encouraged traders to buy oil.

Rubber: stuck. Rubber prices stuck at 797.5 pounds per ton on
the London market.

A study by the London-based Economist Intelligence Unit
predicted that the market for car tires, the main outlet for
rubber, should continue to expand at a yearly rate of two percent
until 2005, mainly thanks to higher sales in emerging markets in
Asia, Latin America and Eastern Europe.

Cocoa: bubbling. Cocoa prices soared to a six-month high after
a wave of speculative buying sparked by fears of a crunch in
supplies over coming months.

The London reference price (for delivery in May) gained almost
10 percent to 1,025 pounds per ton.

Cocoa prices have been relatively low in recent years because
of the burgeoning stockpiles across the world, one analyst
explained.

Coffee: boiling. Prices continued to climb in the United
States, because of low stocks of high-grade arabica beans (grown
in Brazil) and large-scale buying by coffee roasters.

The price of robusta, mainly produced in Asia and Africa and
widely used to make instant coffee, hit $1,800 per ton mid-week
in London, before slipping back to $1,650.

The rally in prices was limited by significant sales by
producers.

The prospect of a fall in exports from African countries in
the first half of 1997, in line with an export limitation plan
drafted by the Association of Coffee Producing Countries (ACPC),
supported prices.

But more fundamentally, the poor harvests expected this year
in Brazil and Colombia (the world's two major producers) gave the
market a lift.

Tea: strong. Tea prices have been swept away by the same fever
as coffee and cocoa and have risen sharply in the London auction
houses.

Medium quality brews rose to their highest level since
September 1994 at 126 pence per kg, which was nine pence higher
than last week.

Prices rocketed after Kenya, one of the London market's most
important suppliers, suffered a dramatic fall in output.

Cotton: stretched. Speculative buying lifted cotton prices to
their highest level since June 1996 at 82 cents per pound, which
was two cents higher than last week on the Cotton Outlook index.

Some dealers said that the surge in soya prices had a knock-on
effect on cotton, as U.S. investors put their money on a take-off
in other agricultural products, including cotton.