The coffee crop in Brazil, the world’s largest producer, may be 15-20% greater than projected, said Bill Adams, the chief investment officer at Intermarket Investment Strategies. India’s crop, the third biggest in Asia, will jump 17% to a record next season after rainfall boosted yield prospects, the state-owned Coffee board said yesterday.
“The crops in Brazil and Colombia are not having the challenges we thought they were going to have,” said Adams. “Asia is having a really good season.”
Arabica coffee futures for September delivery fell 3.15 cents, or 2.6%, to $1.197 a pound on ICE Futures US in New York. Earlier, the price touched $1.189, the lowest for a most-active contract since 1 May. The commodity tumbled 9.1% for the week, the steepest decline since 5 December 2008.
Arabica coffee traded in New York may fall to $1.066 a pound by the end of September, Adams said.
Global coffee production was projected to drop 5.4% to 127.443 million bags in the next marketing year by the Foreign Agricultural Service of the US Department of Agriculture. The forecast cited a decline in Brazil’s output.
Farmers in Brazil may collect 43.5 million bags of coffee in the 12 months starting on 1 July, 15% less than the current season’s harvest, as trees enter the less productive phase of their biennial cycle, the USDA unit said last week. A bag weighs 60kg.
Rain in Vietnam this June may ease concern that earlier adverse weather damaged coffee crops in the world’s largest producer after Brazil. Vietnam is the world’s biggest producer of robusta varieties.
Coffee has climbed 6.8% this year in New York amid tight supplies from central America and from Colombia, the third-biggest producer.
In London, robusta coffee for July delivery sank $93, or 6.5%, to $1,344 a metric tonne on the Liffe exchange. Robusta is down 12% for the week, the steepest such decline since March 2008.
In another ICE market, orange juice futures for September delivery slid 0.85 cents, or 1%, to 80.4 cents a pound. The most active contract dropped 6.3% for the week, the biggest such drop since 16 January.
The price has slumped for three straight weeks as rain revived dry groves in Florida, the world’s largest producer after Brazil. The state’s harvest usually begins in October.
“A hurricane will start all this concern and there may be some buying interest,” Adams said. “There’s no demand in this market except for standard protection against the Atlantic Ocean hurricane season,” he said. The hurricane season began on 1 June and usually ends by 30 November.
Source: Bloomberg
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