By Julie Wernau
Coffee prices closed at a six-month low Tuesday with the coffee market in a holiday malaise.
Arabica coffee for March delivery fell 1.4% to $1.3420 a pound on the ICE Futures U.S. exchange, its lowest close since June 9.
Brazil, the largest producers of the mild arabica bean, has lowered its 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 due to 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 closed up 2.2% at 18.54 cents a pound, March cocoa lost 1.2% to settle at $2,237 a ton, March frozen concentrated orange juice was down 0.1% to settle at $1.8930 a pound and cotton for March delivery lost 0.2% to end at 69.74 cents a pound.
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(END) Dow Jones Newswires
December 27, 2016 15:50 ET (20:50 GMT)
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