Bloomberg News

Coffee Declines on Speculation Supplies Will Be Ample

May 03, 2012

Coffee futures fell the most in six weeks on speculation that supplies will be ample, especially from Brazil, the world’s top producer. Cocoa also slid, while sugar rose.

Brazil’s coffee crop will be 1.7 percent larger than forecast for the season that starts in July, Volcafe Ltd., a unit of commodities trader ED&F Man Holdings Ltd., said in a report on April 20. The Brazilian real fell today to the lowest since late September, which may encourage exporters to boost shipments sold for dollars.

“All producers, not only Brazil, have a lot of coffee to sell,” Hernando de la Roche, director of futures at INTL FCStone in Miami, said in a telephone interview. “The real has fallen a lot this year, and the weak global economy is pressuring all commodities.”

Arabica coffee for July delivery tumbled 3.8 percent to settle at $1.758 a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest drop since March 22. The commodity posted the biggest drop among the 24 raw materials tracked by the Standard & Poor’s GSCI Spot Index.

Prices have tumbled 43 percent from a 14-year high of $3.089 on May 3, 2011, as slowing economic growth eroded demand.

Shares of Green Mountain Coffee Roasters Inc. (GMCR:US) plunged as much as 51 percent today after the company said profit will be less than it expected amid the slowest sales growth in five years.

Slowing Demand

In the 13 weeks ended March 25, U.S. retailers sold 4 percent fewer units of non-decaffeinated ground coffee than a year earlier, according to Chicago-based researcher SymphonyIRI. Ground coffee accounts for more than half of domestic demand in the U.S., the biggest consumer.

The drop in ground-coffee sales shows “demand is hurting,” Judy Ganes-Chase, the president of J. Ganes Consulting in Katonah, New York, said in an e-mail.

Cocoa futures for July delivery slumped 1.5 percent to $2,307 a metric ton on ICE, the first drop in three days.

Raw-sugar futures for July delivery increased 0.5 percent to 20.65 cents a pound in New York, the first advance in six sessions.

In London futures trading, robusta coffee, cocoa and refined sugar declined on NYSE Liffe.

To contact the reporter on this story: Marvin G. Perez in New York at mperez71@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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Companies Mentioned

  • GMCR
    (Keurig Green Mountain Inc)
    • $121.91 USD
    • 1.96
    • 1.61%
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