Coffee futures extended a slump that sent prices to the lowest since 2009 on signs of ample supply. Cocoa fell to a seven-week low, and sugar declined from a one-week high.
Global supplies of coffee will exceed demand for the second straight year amid bumper crops in Brazil, the world’s top producer, according to Volcafe, the coffee unit of commodities trader ED&F Man Holdings Ltd. Brazilian farmers will harvest a record 57.8 million bags in the 2013-2014 season, Volcafe estimated. A bag of coffee weighs 132 pounds (60 kilograms). Prices have plunged 12 percent in the past two weeks and are headed for the biggest monthly drop since October.
“For the time being, with everything being ideal weather-wise, and with the harvest getting started here soon, we should see prices move sideways to lower here,” Boyd Cruel, a market analyst at Vision Financial Markets in Chicago, said in a telephone interview. “Production is going to look positive.”
Arabica coffee for July delivery fell 0.8 percent to $1.262 a pound at 11:50 a.m. on ICE Futures U.S. in New York, after touching $1.258, the lowest for the most-active contract since Sept. 30, 2009. On London’s NYSE Liffe exchange, robusta-coffee futures for July delivery dropped 1.5 percent to $1,922 a metric ton.
Cocoa futures for July delivery declined 2 percent to $2,202 a ton in New York, after touching $2,201, the lowest for a most-active contract since April 9. In London, cocoa futures for July delivery fell 1.3 percent to 1,502 pounds ($2,261) a ton in London.
Raw-sugar futures for delivery in July fell 0.1 percent to 16.83 cents a pound on ICE, after touching 17 cents, the highest since May 20. In London, refined-sugar futures for delivery in August added 0.5 percent to $478.80 a ton.
Sugar output in Brazil’s Center South, the nation’s main growing region, more than doubled in the first half of May from a year earlier, Unica, a Sao Paulo-based industry group, said today. Production totaled 2.06 million tons in the period, up from 1.02 million a year earlier.
While the government has given tax breaks to millers in a bid to boost ethanol output, producers still directed 43.5 percent of all the cane crushed in the period to making sugar at the expense of the biofuel. That’s lower than the 45.1 percent a year earlier and higher than the 42 percent in the second half of April, Unica data showed.