June 12, 2013 7:12 p.m. ET
Some investors smell opportunity in the biggest coffee-market bust in more than a decade.
Coffee-bean prices have fallen 54% in the past two years. The drop has been so steep that longtime coffee farmers are considering other uses for their land, in a move that some investors are counting on to reduce a coffee glut and drive a price rebound.
Prices for arabica coffee on the ICE Futures U.S. exchange fell to their lowest levels since September 2009 on Wednesday. These prices, which reflect roasters' wholesale coffee costs, settled at $1.2275 a pound, down 3.9% on the day, the biggest one-day drop since April 23. Retail prices have declined less sharply.
Benchmark arabica coffee prices are approaching the cost of production in top grower Brazil, and already have fallen below that point in other countries including Colombia, growers say.
"It is impossible to go on," says Joaquim Libânio Ferreira Leite. He said his family has grown arabica coffee for seven generations in Brazil, but now is converting some land to cattle pastures. "No money, no coffee."
Growers are nixing the planting of new trees and rationing the use of fertilizer. Mr. Leite, who is the export director of Brazil's biggest coffee cooperative, which grows about 10% of the country's crop, expects other co-op members to follow his lead.
"There is not one producer that can make money at current prices," said Mark Nucera, president of M.A. Nucera, an Atlanta consulting firm that advises investors on commodities trades. "The prices are so terrible, you would expect less production" next season.
Mr. Nucera recently placed bets that arabica-coffee prices would rise. He expects the market to begin moving higher around October.
The tumble in prices is the product of two years of swelling coffee production in Brazil. Growers in the South American nation invested heavily in their farms as prices rallied to a 14-year high in 2011, expanding coffee-growing lands and planting high-yielding tree varieties.
When prices slid, they held on to some of their beans in hopes of pushing prices back up. But the bounce never materialized. As a result, farmers now have even more to sell as they start picking this season's crop, which Brazil's government expects to be near a record.
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Growers Cut Back on Coffee and the Bulls Start Waking Up - WSJ.com
Secondo un articolo del WSJ di giugno il prezzo della varietà arabica già allora era vicino al costo di produzione di qualche zona ed era persino sceso sotto il costo di produzione della Colombia.
Secondo un esperto , dopo una prolungata fase ribassista il prezzo ( in dollari) avrebbe cominciato a salire intorno a ottobre