Arabica coffee prices settled at a 3½-year low on expectations of an onslaught of beans from top grower Brazil. Coffee for July delivery on the ICE Futures U.S. exchange fell 2.8 cents, or 2.2%, to $1.2725 a pound on Friday, the lowest settlement for the most actively traded contract since Oct. 1, 2009.
While prices have been falling for much of the year as global supplies have exceeded demand, the latest leg of the drop comes as farmers in Brazil are harvesting new coffee beans even as they haven’t finished selling last season’s supplies.
Brazil, which accounts for about one-third of the world’s coffee supply, is expected to produce 48.6 million 60-kilogram bags of arabica beans this season, a record for an “off-year” crop. Brazil traditionally has harvested its coffee on a two-year cycle, with the “on year” producing a larger crop, followed by a smaller crop in the “off year.”