Coffee tumbles to lowest since March 2009
Coffee fell to the lowest in more than four years as dry weather helps improve growing conditions in Brazil, the world's largest producer and exporter.
By Bloomberg | Updated:
NEW YORK: Coffee fell to the lowest in more than four years as dry weather helps improve growing conditions in Brazil, the world's largest producer and exporter.
Most of Brazil's growing areas will get sun this week, as alternating periods of rain and dry weather allow farmers to work in fields and spur crops that will be collected next season to flower multiple times, Marcio Custodio, a forecasting director at Sao Paulo-based Somar Meteorologia, said on Tuesday in a telephone interview. The beneficial conditions will boost output, he said. Global production is set to exceed demand for a fourth straight season, pushing inventories to a five-year high, according to the US Department of Agriculture.
The glut is helping to cut costs for Starbucks and Kraft Foods Group as coffee futures tumbled 22% in 2013, the third-largest drop among the 24 commodities tracked by the Standard & Poor's GSCI Spot Index.
"Brazil's going to have another good crop, and they have quite a bit of carryover from last year," Rodrigo Costa, a trading director at Caturra Coffee a dealer in Elmsford, New York, said in a telephone interview. "There are also promising harvests in Indonesia and Colombia. The trend is lower for prices."
Arabica coffee for delivery in December fell 1.7% to settle at $1.127 a pound at 2 p.m. on ICE Futures US in New York, after touching $1.123, the lowest since March 18, 2009. Futures are heading for a third straight annual decline, the longest slump since 1993. The "recent favourable weather conditions" prompted Goldman Sachs Group to lower its price outlook by 7.7%.
Most of Brazil's growing areas will get sun this week, as alternating periods of rain and dry weather allow farmers to work in fields and spur crops that will be collected next season to flower multiple times, Marcio Custodio, a forecasting director at Sao Paulo-based Somar Meteorologia, said on Tuesday in a telephone interview. The beneficial conditions will boost output, he said. Global production is set to exceed demand for a fourth straight season, pushing inventories to a five-year high, according to the US Department of Agriculture.
The glut is helping to cut costs for Starbucks and Kraft Foods Group as coffee futures tumbled 22% in 2013, the third-largest drop among the 24 commodities tracked by the Standard & Poor's GSCI Spot Index.
"Brazil's going to have another good crop, and they have quite a bit of carryover from last year," Rodrigo Costa, a trading director at Caturra Coffee a dealer in Elmsford, New York, said in a telephone interview. "There are also promising harvests in Indonesia and Colombia. The trend is lower for prices."
Arabica coffee for delivery in December fell 1.7% to settle at $1.127 a pound at 2 p.m. on ICE Futures US in New York, after touching $1.123, the lowest since March 18, 2009. Futures are heading for a third straight annual decline, the longest slump since 1993. The "recent favourable weather conditions" prompted Goldman Sachs Group to lower its price outlook by 7.7%.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
