Building on the relentless selling of the past three weeks, benchmark December arabica coffee futures on ICE settled down 1.9 percent at $1.015 per lb, having earlier touched $1.010, the lowest close for the most actively traded contract since Sept. 14, 2006.
Prices for Arabica beans, the most widely grown variety of coffee, have tumbled 29% this year as a second bumper crop from top grower Brazil hit international markets. The latest drop is fueled by harvests from Central America and Colombia and expectations of another good crop in Brazil adding to already ample supplies.
Brazil’s crop will be a record for a year in which trees enter the lower-yielding half of a two-year cycle, broker INTL FCStone Inc. (INTL) said in a report e-mailed yesterday. Conditions for the development of next year’s harvest appear to be “good,” it said. Farmers in Colombia will reap 10.6 million to 10.8 million bags in 2013, exceeding a target of 10 million bags, the Colombian Coffee Growers Federation said. Central America started harvesting last month. A bag weighs 132 pounds.
The market is in the second consecutive year of surplus, with a third expected to follow in the 2013-14 crop year. Brazil‘s crop could reach an estimated 60 million bags of coffee next year, a record after this year’s low-yielding harvest, analysts said.