Coffee drinkers rejoice: Price of beans hits four-year low
Cash-strapped consumers finally have some good news to toast -- perhaps with a steaming cup o’ joe.
The price of coffee beans hit a four-year low on Monday.
Dry weather has improved growing conditions in Brazil, the world’s largest producer and exporter. Globally, production is set to exceed demand for a fourth straight season, pushing coffee inventories to a five-year high, according to the U.S. Department of Agriculture.
The glut is helping to cut costs for Starbucks Corp. and Kraft Foods Group Inc. as coffee futures tumbled 22% in 2013, the third-largest drop among the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index, Bloomberg News reported.
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“Brazil’s going to have another good crop, and they have quite a bit of carryover from last year,” said Rodrigo Costa, a trading director at Caturra Coffee Corp. a dealer in Elmsford, N.Y. “There are also promising harvests in Indonesia and Colombia. The trend is lower for prices.”
Arabica coffee for delivery in December fell 1.7% to settle at $1.127 a pound at 2 p.m. on ICE Futures U.S. in New York, after touching $1.123, the lowest since March 18, 2009.
Futures are heading for a third straight annual decline, the longest slump since 1993. The “recent favorable weather conditions” prompted Goldman Sachs Group Inc. to lower its price outlook by 7.7%, analysts said in an Oct. 18 report.
Consumers are already seeing a difference at the cash register. Cheaper beans prompted J.M. Smucker Co. to cut prices in February for Folgers, the top-selling U.S. brand. In May, Kraft said it was cutting the price of 12-ounce bags of Gevalia coffee by 6%.
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