Investing.com – Coffee futures regained strength on Tuesday, rebounding from the lowest price in more than two months after the International Coffee Organization cut its forecast for global coffee production in the current marketing year.
On the ICE Futures Exchange, Arabica coffee for March delivery traded at USD2.2145 a pound during European afternoon trade, gaining 0.47%.
It earlier rose by as much as 0.9% to trade at a daily high of USD2.2393 a pound. Prices fell to USD2.2025 a pound on Monday, the lowest since October 3.
Coffee futures plunged nearly 3% in the previous session as a broadly stronger U.S. dollar and fears over the possibility of a mass downgrade of euro zone sovereign debt dampened demand for riskier assets.
But prices found support after the International Coffee Organization said world coffee production was expected to total 128.6 million 60-kilogram bags in the 2011-12 marketing season, down from 133.1 million bags a year earlier.
In a report published earlier, the London-based industry group said the downgrade reflected adverse weather conditions in several key exporting countries, including Brazil, Colombia and Vietnam.
Brazil is the world's largest producer and exporter of Arabica coffee, while Colombia is the world's second largest. Arabica is grown mainly in Latin America and brewed by specialty companies.
The ICO warned that a credit squeeze stemming from fears over a sovereign default within the euro zone represented a threat to the global coffee industry.
"Credit restrictions and the lack of liquidity caused by the world financial and economic crisis, combined with higher production costs, could lead to a reduction in supplies," the London-based industry group said earlier.
Coffee prices found additional support as market sentiment improved slightly following the release of data showing an unexpected improvement in German economic sentiment and a well-received Spanish bond auction.
Meanwhile, agricultural commodity traders were awaiting the Federal Reserve’s rate decision later in the day. The Fed was not expected to take any policy action, although further easing steps are seen as likely next year.
Elsewhere, on the ICE Futures Exchange, cotton futures for March delivery plunged 3.85% to trade at USD 0.8694 a pound, while sugar futures for March delivery jumped 0.97% to trade at USD0.2340 a pound.
On the ICE Futures Exchange, Arabica coffee for March delivery traded at USD2.2145 a pound during European afternoon trade, gaining 0.47%.
It earlier rose by as much as 0.9% to trade at a daily high of USD2.2393 a pound. Prices fell to USD2.2025 a pound on Monday, the lowest since October 3.
Coffee futures plunged nearly 3% in the previous session as a broadly stronger U.S. dollar and fears over the possibility of a mass downgrade of euro zone sovereign debt dampened demand for riskier assets.
But prices found support after the International Coffee Organization said world coffee production was expected to total 128.6 million 60-kilogram bags in the 2011-12 marketing season, down from 133.1 million bags a year earlier.
In a report published earlier, the London-based industry group said the downgrade reflected adverse weather conditions in several key exporting countries, including Brazil, Colombia and Vietnam.
Brazil is the world's largest producer and exporter of Arabica coffee, while Colombia is the world's second largest. Arabica is grown mainly in Latin America and brewed by specialty companies.
The ICO warned that a credit squeeze stemming from fears over a sovereign default within the euro zone represented a threat to the global coffee industry.
"Credit restrictions and the lack of liquidity caused by the world financial and economic crisis, combined with higher production costs, could lead to a reduction in supplies," the London-based industry group said earlier.
Coffee prices found additional support as market sentiment improved slightly following the release of data showing an unexpected improvement in German economic sentiment and a well-received Spanish bond auction.
Meanwhile, agricultural commodity traders were awaiting the Federal Reserve’s rate decision later in the day. The Fed was not expected to take any policy action, although further easing steps are seen as likely next year.
Elsewhere, on the ICE Futures Exchange, cotton futures for March delivery plunged 3.85% to trade at USD 0.8694 a pound, while sugar futures for March delivery jumped 0.97% to trade at USD0.2340 a pound.