In just a few short weeks, coffee has gone from star performer to teetering on the edge of bear-market territory amid shifting perceptions on supplies in Brazil, the world’s top producer and exporter.
On Friday, arabica beans for March delivery capped a third straight weekly decline to settle at $1.1215 a pound on ICE Futures U.S. in New York. The price has dropped 19% from a December peak, just shy of the 20% threshold that defines a bear market.
In the first half of December, a bullish stampede prevailed with futures surging 50% in the prior two months. Brazilian cooperative Cooxupe, the top arabica shipper, said in mid-October that it was running out of beans for new orders, countering forecasts of ample supply that drove prices to 13-year lows. At the time, inventories at warehouses monitored by ICE tumbled to an 18-month low.