Arabica coffee futures slumped to cap the biggest weekly loss since July, easing pressure on buyers who are paying the highest prices in years.
The most-active March contract dropped 3.2 percent to US$2.326 a pound in New York on Friday, retreating from a decade high reached on Monday and marking the first weekly decline since Oct. 22.
The futures ended down 4.4 percent for the week, bringing this year’s gain to 81 percent.
Shipments from top exporter Brazil declined 37 percent last month from a year earlier, while second-ranked Colombia also saw exports and output tumble.
Droughts and frosts this year severely damaged Brazilian farms and also eroded yield potential for two more years. Traders are watching to see how big an impact the weather and a worldwide shipping malaise would have on the global market while monitoring producer responses to the better prices.
Profit taking is hitting coffee after reaching a decade high, Ole Hansen, commodity strategist for Saxo Bank A/S, said on Friday in an e-mailed note.
Prices of most agricultural commodities are expected to fall next year, albeit remaining at relatively elevated levels, analysts at Fitch Solutions said.
“We think that global agricultural production will increase over the coming year owing to high plantings incentivized by high prevailing prices for much of 2021, but also because the weather has been more favorable,” the analysts said in a note on Thursday.
Raw sugar rose in New York to cap the biggest weekly rally since mid-August.
Wheat touched the lowest in a month after the US raised its outlook for global and domestic reserves of the grain, and cut back its forecast for exports.
Crop output forecasts for Australia, Russia and Canada were also raised in the US Department of Agriculture’s monthly supply-and-demand report, known as WASDE.
The bigger supply outlook surpassed the average of Bloomberg survey estimates.
It also followed a surge in wheat prices to near-decade highs as weather woes from Australia to North America threatened to drain supplies.
The costly grains now appear to be curbing demand, with US export sales at the end of last month slumping to the lowest since 2018.
“The main pressure for the US is that we are the highest-priced source of wheat in the global market,” AgriVisor LLC analyst Karl Setzer said. “Until we correct, our demand will suffer.”
A separate report out of Argentina on Thursday called for wheat production in the South American nation to rise at least 3 percent, beyond what was already seen as record levels.
Most-active benchmark wheat futures in Chicago ended the day down 2.2 percent at US$7.7675 a bushel, the lowest settlement since Nov. 8.
Contracts tied to other grain varieties in the US and France also fell. A sustained decline could help ease global food prices that are edging close to a record high.
In other agricultural commodities, the department showed a slight increase in US cotton production and lower world ending stockpiles, mainly on decreased output and improved consumption. The changes were within expectations and cotton futures were little changed.
Metals:
‧Goldfor February delivery on Friday rose US$8.10 to US$1,784.80 an ounce, little changed from last week’s US$1783.90 an ounce.
‧Silver for March delivery rose US$0.19 to US$22.20 an ounce, down 1.2 percent weekly, and March copper fell US$0.04 to US$4.29 a pound, up 0.5 percent for the week.
Additional reporting by AP
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