Arabica Coffee Retreats to $1.8550/Lb as Traders Take Profits

Alexandra Wexler

  NEW YORK--Arabica-coffee futures tumbled Wednesday as investors booked profits from the market's

meteoric rise this year.

  "You've got to feed a bull really well, and we're not feeding it enough right now," said Jack

Scoville, vice president at Price Futures Group in Chicago. "The fact of the matter there is

probably going to be enough coffee out there."

  Despite pulling back from last week's two-year high of $2.0595 a pound, arabica futures are still

up 68% in 2014, propelled by concerns that Brazil's worst drought in decades would reduce output

from the top coffee grower and exporter, tightening global supplies.

  "The market went up too much too fast," said Marco Figueiredo, vice president at Ally Brazilian

Coffee Merchants in Plantation, Fla. "It's a lot of profit-taking."

  Arabica coffee for delivery in May on the ICE Futures U.S. exchange fell 3.2% to $1.8550 a pound,

the lowest settlement since March 4.

  January and February were the driest months in Brazil in 30 years, according to Somar

Meteorologia, a Sao Paulo-based private weather service. That has reduced the size of the 2014 crop

in the main-coffee growing regions of Brazil, growers and exporters said.

  The country's National Coffee Council said last month that the 2014 crop would be at least 10%

smaller than 2013's harvest and that the dry weather would reduce the 2015 crop to 44 million bags

at best. Brazilian farmers produced 49.2 million 60-kilogram (132-pound) bags of the beans in 2013,

the council said.

  "The whole picture, in my opinion, is kind of bullish," Mr. Figueiredo said. "It's a matter of a

correction, and then it's going to go up again."

  But recent rains and forecasts for additional precipitation in coming weeks have taken some of the

wind out of the market's sails. Wet weather now could help 2015's crop, traders and analysts say,

but the rain is likely too late to be of assistance for this year's output.

  "There are forecasts for a lot better rain," Mr. Scoville said. "That should stabilize the

situation down in Brazil."

  In other markets, cotton for delivery in May on ICE ended 0.3% lower at 92.62 a pound and cocoa

for delivery in May closed 0.4% higher at $3,025 a ton. Orange juice for May delivery settled less

than 0.1% lower at $1.5290 a pound, and raw sugar for May delivery ended up 1.1% at 17.34 cents a

pound.