(Bloomberg) -- 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.
On Friday, ICE stockpiles capped their first back-to-back weekly gain since mid-August. Brazilian currency weakness this month boosted the appeal of exports priced in the greenback. Also this week, Brazil's crop agency Conab reiterated that growers will collect another bumper harvest in 2020, albeit probably less than 2018's record levels. Exports of green beans rose 15% to an all-time high in 2019, industry group CeCafe said.
“As the crop was smaller last year, the big export volume implies Brazil probably had ample inventories,” Nelson Carvalhaes, CeCafe president, said this week at a press briefing.
To contact the reporter on this story: Fabiana Batista in Sao Paulo at fbatista6@bloomberg.net
To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Patrick McKiernan
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