Coffee futures slumped to the lowest in almost 32 months on mounting concern that global demand will trail supplies boosted by jumbo crops in Brazil and Colombia.
Plants in Brazil, the world’s top grower, will get beneficial rain this week, Sao Paulo-based Somar Meteorologia said. During the low-yielding cycle of the biennial crop, the harvest will approach last year’s all-time high, the government has said. In 2013, output in Colombia, the second-biggest arabica producer, will jump 30 percent from a year earlier, an industry group said today.
“Bears keep noting that there is more than enough coffee,” Jack Scoville, a vice president at Price Futures Group in Chicago, said in a report. “Current crop development is good this year in Brazil,” and “Colombia is reported to have good conditions,” he said.
Arabica coffee for March delivery slid 1.3 percent to settle at $1.403 a pound at 2 p.m. on ICE Futures U.S. in New York. Earlier, the price touched $1.3965, the lowest for a most- active contract since June 11, 2010. Volume was more than double the average for the past 100 days, data tracked by Bloomberg showed.
“Producers are selling, trying to secure a better income in case prices continue to drop,” Hernando de la Roche, a senior vice president for INTL FCStone in Miami, said in a telephone interview.
Arabica is grown mainly in Latin America and brewed by specialty companies including Starbucks Corp. Robusta beans, used in instant coffee, are harvested mostly in Asia and parts of Africa.
On NSYE Liffe in London, robusta futures for March delivery rose 1.4 percent to $2,098 a metric ton (95 cents a pound). Earlier, the price reached $2,109, the highest since Oct. 11.
The price has climbed 13 percent in the past 12 months as roasters and consumers favored the cheaper beans, partly because of the fragile global economy. Nestle SA is the global leader in the instant coffee market.
Colombia’s output will rise to 10 million bags this year from 7.7 million in 2012, Luis Genaro Munoz, the head of the National Federation of Coffee Growers, said in a telephone interview from Bogota.
ICE inventory has jumped 72 percent to 2.64 million bags in the past 12 months. A bag weighs 60 kilograms, or 132 pounds.
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