Forexpros – Coffee futures edged lower on Wednesday, re-approaching a one-year low as ongoing concerns over ample global supplies weighed, while fresh fears over coffee crop conditions in Colombia limited losses.
On the ICE Futures Exchange, Arabica coffee for March delivery traded at USD2.2053 a pound during European afternoon trade, shedding 0.25%.
It earlier fell by as much as 0.55% to trade at a daily low of USD2.1922 a pound. Prices dropped to a one-year low of USD2.1237 a pound on Monday.
Coffee futures have declined in nine of the last 12 trading sessions, losing nearly 8% since the start of December as strong competition from low-cost producers in Central America and East Asia have dominated sentiment in recent weeks.
Fresh fears over coffee production in Colombia underlined prices after heavy rains in the northern part of the country damaged coffee plants.
The heavy rains contributed to an outbreak of a fungus known as ‘roya’, the Spanish word for “coffee rust.” It grows on the leaves of a coffee plant and chokes off nutrients to the beans, potentially threatening yields and reducing the quality of the harvest.
The National Federation of Coffee Growers of Colombia, or Fedecafe, declined to give a firm estimate for next year’s crop, saying projections are hard to make given the large amount of rain that came down this winter.
However, prices continued to be weighed by forecasts of increased output in top grower Brazil. Last week, Brazil’s National Coffee Council said the country was expected to produce as much as 52 million bags in the 2011-12 marketing season, an 18% increase over last year.
Brazil is the world’s largest producer and exporter of Arabica coffee, while Colombia is the world’s second largest producer. Arabica is grown mainly in Latin America and brewed by specialty companies.
Meanwhile, the European Central Bank said that it allotted EUR489.2 billion to 523 European lenders in its first offer of three-year loans earlier in the day, exceeding expectations for a total amount of EUR391 billion.
Risk aversion sharpened following the announcement, as the scale of the operation indicated that European lenders believe that funding shortages are likely to continue into 2012.
Elsewhere, on the ICE Futures Exchange, cotton futures for March delivery dipped 0.2% to trade at USD 0.8664 a pound, while sugar futures for March delivery fell 0.35% to trade at USD0.2334 a pound.
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