Coffee Plummets; Oil And Gold Weak
Reuters; October 14, 1999
NEW YORK (Reuters) -
Coffee prices fell sharply Thursday as weather forecasts increased expectations that rains would arrive soon to relieve stress on coffee trees in top grower Brazil.
In other commodity markets, oil and gold prices fell sharply as speculators sold to cash in profits. Soybean prices eased but corn prices closed steady.
At the New York Board of Trade, coffee prices tumbled by about 10 percent and ended a three-day rally triggered by Brazil weather fears. Coffee for December delivery fell 12.25 cents a pound to close at 107.10 cents.
A week ago, the market was trading at 86 cents.
Brazil accounts for more than a third of world coffee production. It had emerged from its winter months with coffee trees undamaged by winter cold or frost, but excessive dryness had sparked this week's rally on fears that it would stress the trees and hurt yields.
Brazilian forecaster Somar said Thursday that Brazil's coffee belt should see a gradual return of rains through next week.
But U.S.-based Weather Services Corp. said the rains might not be enough for the trees to recover.
``The forecast rain event for early next week does not appear to us to be enough to end crop stress,'' the private forecaster said. ``The very long-range outlook calls for a return to dry weather throughout the coffee belt during the middle to latter part of next week.''
``The drought is so different from a freeze,'' said Judith Ganes, first vice-president and senior tropical soft commodities analyst for Merrill Lynch. ``A drought is something that's progressive and you're constantly watching the weather forecasts and differing opinions on how much rain fell.''