Coffee Sinks on Brazil Supplies as Goldman Cuts Price Forecast

Arabica-coffee futures fell the most in seven weeks on speculation that ample supply in Brazil, the world’s leading producer and exporter, will compensate for production losses from a fungal disease in Central America.

Goldman Sachs Group Inc. cut its price forecasts for the beans favored by Starbucks Corp. (SBUX), citing improving prospects for the 2013 crop in Brazil, the bank’s analyst Damien Courvalin, said today in an e-mailed report. As of March 31, farmers in the South American country sold 75 percent of the most recent harvest compared with 86 percent a year earlier, Porto Alegre, Brazil-based consulting firm Safras & Mercado estimates.

“This improving Brazilian production outlook offsets additional downward revision to Central American production, on damages from the leaf rust fungus,” Courvalin said.

Arabica coffee for delivery in July tumbled 3.2 percent to $1.385 a pound at 10:57 a.m. on ICE Futures U.S. in New York, heading for the biggest drop since March 5.

Prices will be at $1.45 in three, six and 12 months, Goldman said. That is down from previous forecasts of $1.55, $1.65 and $1.75, respectively, it 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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.