(Updates with CEO comments from third paragraph.)
Oct. 26 (Bloomberg) -- Coffee may drop as much as 23 percent next year as Brazil, the world’s largest producer, prepares to harvest a bumper crop, Illycaffe SpA Chief Executive Officer Andrea Illy said.
Coffee may fall to between $1.80 and $2 a pound next year as the South American country harvests as much as 58 million bags in the next May-September season, Illy said today at an event in Sao Paulo. Arabica coffee for December delivery fell 1.2 percent to $2.337 per pound on ICE Futures U.S. in New York today. It’s up 14 percent this year.
“January could be the moment when the market starts anticipating the large Brazilian crop,” said Illy, who heads the company founded by his grandfather in Trieste, Italy, in 1933. The crop will be “good” in terms of quality and production, he said.
Coffee output in Brazil will rise to between 57.5 million to 60 million bags next year, Comexim Ltda, a Brazilian coffee exporter, said Oct. 13. That compares with 43.1 million bags harvested this year, according to a Sept. 13 government estimate. A bag of coffee weighs 60 kilograms (132 pounds).
Concern that global stockpiles are still too low to ensure supply meets demand have kept coffee prices near $2.30 a pound, a “very high level,” Illy said.
“It may take two or three years to build a decent level of stocks to really calm down the market,” Illy said today in an interview in Sao Paulo. Coffee stockpiles “are still very low.”
--Editors: Carlos Caminada, Dale Crofts
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