February 22, 2012
Forexpros - Coffee futures resumed
their downward trend on Wednesday, moving closer to last week’s 15-month low as
speculation of a record Brazil crop continued to dampen sentiment on the
commodity.
On the ICE Futures Exchange, Arabica
coffee for May delivery traded at USD2.0403 a pound during European afternoon
trade, shedding 0.79%.
It earlier fell by as much as 1.1%
to trade at a session low USD2.0353 a pound.
Last week, coffee prices dropped
below the USD2.00-a-pound level for the first time since November 2010 as
traders eyed a huge harvest in top grower Brazil and speculators pushed prices
lower.
German coffee trader Neumann Kaffee
Gruppe on Tuesday forecast Brazil's upcoming 2012-13 Arabica coffee crop to
reach 55.0 million bags.
That would exceed a record 48.5
million bags in 2002. A bag of coffee weighs 60 kilos (132 pounds). Most coffee
harvesting in Brazil starts in May.
Brazil is the world's largest
producer and exporter of Arabica coffee. Arabica is grown mainly in Latin
America and brewed by specialty companies.
The record Brazil crop prompted
commodity heavyweights Goldman Sachs and Barclays Capital to downgrade their
respective average coffee price outlooks.
In a report published Tuesday,
Goldman cited “expectations for record production from Brazil” as the main
factor behind its bearish view on the bean.
“Going forward, we expect the
2012-13 supply response to recent high coffee prices will likely generate a
surplus under average weather conditions," the report said.
Separately, BarCap said prices were
poised for further declines in the near-term, weighed by an anticipated record
crop from Brazil, an easing in consumption growth from emerging market economies
and a weaker La Nina weather pattern.
Prices found some support after the
International Coffee said world coffee consumption rose nearly 2% to an
estimated 136.5 million bags in 2011, citing growing demand from emerging
markets.
“This increase can be attributed to
growing demand in emerging markets, rising domestic consumption in exporting
countries and the resilience of coffee consumption to the current economic
crisis,” the ICO said in a report.
The ICO noted that future demand
prospects for coffee continue to be promising, citing the growth of niche
markets in traditional consuming countries and the arrival of new consumers in
emerging markets and exporting countries.
Elsewhere, on the ICE Futures
Exchange, cotton futures for May delivery shed 0.25% to trade at USD 0.9273 a
pound, while sugar futures for March delivery rose 0.67% to trade at USD0.2555
a pound.