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Coffee needs a sweetener
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September 14, 1998: 5:27 p.m. ET
Supply pressures weigh, spec selling kicks in as coffee hits new two-year lows
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NEW YORK (CNNfn) - Coffee prices dripped to new two-year lows on Monday as speculative selling combined with lingering fear about a bumper crop in Brazil.
The New York Coffee, Sugar and Cocoa Exchange coffee futures contract for delivery in December, the most-active contract, settled at $1.0170 a pound, down 2.45 cents.
That was up only slightly from a mid-session low of $1.0135 a pound, the new all-time low for that December contract. Coffee futures are at their lowest levels since September 1996, said Hans Kashyap, president of Analytics Research Corp. in Bethesda, Md.
While coffee futures blipped down as low as 83 cents per pound in January 1996, Kashyap said, the last time they held near or below $1 a pound was in 1987.
Coffee futures have been sweltering under expected large harvests out of Brazil, the world's top producer, and flat demand worldwide.
"There is a pretty even flow of coffee that's coming out," said Judy Gaines, a commodity analyst with Merrill Lynch. She also said that speculative selling drove prices lower.
"While there may be tightness in some quality growth, there seems to be ample supply. And there have been good rains in Brazil," she said, suggesting supply could continue to pressure the market.
Meanwhile, the difference between the price of far-off coffee futures prices and those close to the current spot month of September is not as pronounced as once before.
That means the market expects prices to remain low for some time, Gaines said. "But who knows? People may drink more coffee," as a result of the global market jitters, she said.
Wheat prices get a little footing
Elsewhere in the battered commodity market, wheat futures rose on hopes that International Monetary Fund bailout money may be headed to key consuming countries - and help restart lagging demand.
The Chicago Board of Trade red wheat futures contract for December delivery rose 4-3/4 cents to settle at $2.63 per bushel.
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