Arabica-Coffee Futures Fall to New 4 1/2-Year Low; Cocoa Down

Alexandra Wexler

  NEW YORK--Arabica-coffee futures continued to plumb 4 1/2-year lows on

Monday, as harvesting ramped up in Colombia and Central America, adding to

massive supplies from top grower Brazil.

  Back-to-back bumper crops from Brazil, the source of one-third of the world's

coffee, have crushed coffee prices, which have tumbled 54% over the last two

years.

  In 2012, growers reaped a record 50.8 million 60-kilogram (132-pound) bags of

coffee, and Brazil's government crop forecaster Conab expects this year's crop

to be 47.5 million bags, a record "off-year" harvest. Coffee trees produce

fruit in two-year cycles, alternating higher and lower output.

  More recently, the harvest in No. 2 producer Colombia has added pressure to

the market. The Colombian Coffee Growers Federation expects production to

increase by a third from a year ago. Farmers there have been replanting their

land with disease-resistant varieties to fight a devastating coffee-plant

fungus, and some of those plants are finally bearing fruit.

  Prices for arabica, which is prized for its mild flavor, have crumbled 7.8%

over the last two weeks.

  "The solid off-year production in Brazil, improved Colombian production and

the very favorable start to the Brazilian new crop are all taking their toll on

prices," said Sterling Smith, a futures specialist at Citigroup in Chicago.

"The coffee does look to be targeting the $1.00 level."

  Arabica coffee for December delivery on the ICE Futures U.S. exchange ended

1.4% lower at $1.0755 a pound Monday, the lowest settlement since March 11,

2009. It was the sixth straight session that the most active contract ended the

day's trade at a new 4 1/2-year low.

  Societe Generale forecast an average price of $1.15 a pound in the fourth

quarter, blaming a glut of global supplies.

  Cotton futures slid to a more than nine-month low on Monday, as wan demand

left the market to drift lower. Cotton for December delivery on ICE ended 0.5%

lower at 78.65 cents a pound, the lowest settlement since Jan. 18.

  "Either continuation of the downtrend or brief consolidation period is the

most likely path for (cotton) in the near term," said Louis Rose, founder and

owner of Risk Analytics LLC, a cotton consulting firm based in Memphis, Tenn.

  Cocoa for December delivery on ICE ended 1.1% lower at $2,684 a ton, a

three-week low, and raw sugar for March delivery shed 0.6% to end at 18.91

cents a pound, a near-two-week low. Orange juice fell to $1.1860 a pound, down

1.8% on the day as weak demand for the beverage and a lack of weather threats

to the U.S. crop weighed on the market.