Adam Sarhan Reuters Quote: Large Harvests Pressure Coffee In London, U.S.

Reuters

Futures

Large Harvests Pressure Coffee In London, U.S.

By REUTERS

 Posted 11/05/2012 05:27 PM ET
Coffee dropped Monday, with Liffe robustas falling to an eight-month low while ICE arabica coffee reached a 4-1/2-month low, as growing supply takes a bite out of prices.

January robusta coffee futures dropped $24 to $1,952 a metric ton, after touching the lowest for the second position since March 7 at $1,935. Dealers said the market remained under pressure from the prospect of another large crop in top robusta producer Vietnam, where the harvest is under way.

“The market looks at it (the harvest) and they reckon the crop is going to be a quite substantial amount, and nobody wants to buy,” said a London-based broker, noting that trading volumes were low as investors remained cautious ahead of the U.S. presidential election.

December/March spreading in the arabica coffee market, however, helped to lift volume there. The spread’s discount narrowed to close at 4.90 cents, from 5.05 cents per pound in the previous session, a 1-1/2-year high, a bearish factor indicating plentiful supplies.

” … (S)upply numbers are up and what that tells me is that it’s going to adversely affect price, and that’s exactly what we’re seeing,” said Adam Sarhan at New York’s Sarhan Capital, noting that demand is just stable to slightly lower.

“When supply is up, demand is stable, the equilibrium between supply and demand is leaning towards the bearish side,” he said.

December arabica coffee closed down 3.80 cents, or 2.5%, at $1.5090 per pound, the spot contract’s lowest settlement since June 20.

 

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