By Julie Wernau
Coffee prices were on track to touch a six-month low Tuesday with the coffee market in a post-holiday malaise.
Arabica coffee for March delivery fell 1.5% to $1.3415 a pound on the ICE Futures U.S. exchange, headed for its lowers close since June 9.
Brazil, the largest producers of the mild arabica bean, has loweredits exports of coffee abroad recently, following a post-election plunge in arabica coffee futures. A rise in the dollar following the election of President-elect Donald Trump in the U.S. has hurt demand for dollar-denominated goods abroad.
"Since the election, coffee prices have plunged and have erased the last 6-months' worth of gains. It's very oversold in the near term and dueto bounce" Adam Sarhan, chief executive of 50 Park Investments, said in a note.
While a weakening of the Brazilian real against the dollar typically helps encourage sales as producers take advantage of a more favorable exchange rate, the currency hasn't weakened nearly as much as coffee prices, which are the weakest they have been since August in local currency terms.
According to exporters group Cecafe, the South American country exported 3.07 million 132-pound bags of coffee last month, a decline of 12.2% from the same month a year earlier.
Sales abroad of the arabica variety of coffee declined 6.7% to 2.7 million bags.
Producers are similarly holding back Colombia, the world's second largest producer of the arabica bean. ED&F Man's Volcafe said in a note that producers and middlemen there have been stocking coffee "still thinking of the prices one month back."
Arabica prices are down 11% so far this month.
In other markets,raw sugar for March was up 0.2% at 18.18 cents a pound, March cocoa lost 1% to $2,241 a ton, March frozen concentrated orange juice was up 0.2% at $1.8185 a pound and cotton for March delivery lost 0.1% to 68.78 cents a pound.
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(END) Dow Jones Newswires
December 27, 2016 10:25 ET (15:25 GMT)
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