Coffee futures retreated on Wednesday, as concerns over ample global supplies were exacerbated after the International Coffee Organization forecast higher global production of the bean.
On the ICE Futures Exchange, Arabica coffee for March delivery traded at USD2.2535 a pound during European afternoon trade, dropping 0.66%.
It earlier fell by as much as 1.1% to trade at a session low of USD2.2338 a pound.
The International Coffee Organization said Tuesday that global coffee bean production was expected to total 132.4 million bags in the 2011-12 marketing season, up 3% from a previous estimate.
The upbeat production outlook reflected higher-than-expected output in Ethiopia, which has overtaken Colombia as the world’s third largest producer after Brazil and Vietnam.
According to the ICO, the African nation was projected to produce approximately 9.8 million bags, an upward revision of close to 6 million bags. The ICO gave no reason for its massive Ethiopian upgrades.
However, the rise in Ethiopian production comes amid a government drive to more than double coffee output in the five years to 2015.
Ethiopia is Africa’s largest coffee producer. Coffee exports account for nearly 40% of the country total overseas exports.
A report from German lender Commerzbank projecting a surplus in global supplies during the current marketing year added to the bearish sentiment.
In a report published earlier the bank said that the worldwide coffee market was expected to have a surplus as output expands in Brazil, the world’s biggest grower.
Prices continued to draw support from lingering concerns over Colombia’s coffee crop outlook. Colombia’s National Federation of Coffee Growers said in a statement Monday that the nation’s coffee harvest was expected to fall to a 35-year low after excess rainfall, diseases and a lack of sunshine curbed yields.
The harvest declined 12% from a year earlier to 7.81 million bags in 2011, the lowest level since 1976.
Elsewhere, on the ICE Futures Exchange, cotton futures for March delivery slumped 0.8% to trade at USD 0.9739 a pound, while sugar futures for March delivery eased up 0.1% to trade at USD0.2405 a pound.