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Arabica-Coffee Futures Drop to Two-Week Low on Ample Supplies

Coffee futures fell to a two-week low in New York on ample supplies in Brazil, the world’s top producer and exporter, just as European consumers face a second year of economic contraction.

Brazilian farmers sold 60 percent of this year’s crop by Dec. 31 compared with 76 percent a year earlier, consulting firm Safras & Mercado said Jan. 17. In 2012, the country’s exports to Europe, the biggest consuming region, sank 15 percent, according to data from Cecafe, the nation’s exporters’ council. Yesterday, the International Monetary Fund cuts its global growth forecast, projecting a second year of contraction in the euro region.

“Brazil has been holding back a lot of coffee,” Hernando de la Roche, a senior vice president at INTL FCStone in Miami, said in a telephone interview. “There’s concern about who’s going to buy it” as Europe’s economy shrinks, he said.

Arabica coffee for March delivery tumbled 2.4 percent to $1.4675 a pound at 12:54 p.m. on ICE Futures U.S. in New York, after touching $1.461, the lowest for a most-active contract since Jan. 9.

Stockpiles at warehouses monitored by ICE climbed to 2.612 million bags yesterday, the highest since March 2010. The inventories surged 68 percent in 2012, the biggest annual gain since 2000, exchange data show. A bag weighs 60 kilograms, or 132 pounds.

The ample supplies are overshadowing concern that leaf rust, a fungus that attacks foliage, will curb output in Central America and Mexico, de la Roche said.

To contact the reporter on this story: Marvin G. Perez in New York at mperez71@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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