Credit Suisse Group AG’s private banking unit raised its price forecasts for arabica coffee traded in New York, saying prices have found a bottom.
Arabica coffee futures will be at $1.80 a pound on ICE Futures U.S. in three and 12 months, the bank said in a report e-mailed today. That compares with a previous forecast of $1.50 a pound. The beans climbed 1.3 percent so far this month on speculation rains in Brazil would reduce crop quality.
“We think coffee prices have found a bottom after a long correction and expect sideways trading going forward,” Tobias Merath, head of commodity research at the bank, wrote in the report. “Prices are now very close to fair value.”
The coffee market remains in a surplus and inventories are rising, Merath said, without giving an estimate. Valuation, technical indicators and fundamentals of coffee have recently improved, according to the bank.
Cocoa prices are likely to keep trading between $2,000 and $2,500 a metric ton in New York for “quite some time,” the bank said. It forecasts prices at $2,250 a ton in three months and $2,300 a ton in 12 months, according to the report. Prices have climbed 1.9 percent this month to $2,335 a ton.
“Prices are testing the upper end of this range again, but we see little impetus for a decisive break higher,” Merath said. “The cocoa market is currently rated neutral on all accounts.”