By Julie Wernau

Coffee futures ended lower Tuesday after a major coffee trading firm predicted that this year's coffee market would end in a surplus.

Arabica coffee for March delivery lost 2.3% to end at $1.5305 a pound on the ICE Futures U.S. exchange, its lowest close since Oct. 13.

Marex Spectron said it expects the 2016/2017 coffee year to end in a small surplus, with 5.8 million more bags of Arabica coffee produced than anticipated global demand. "As such, Marex Spectron is more optimistic than many other observers, who are envisaging the third-consecutive year of deficit," Commerzbank said in a note.

Bullish traders in coffee have been expecting demand for coffee to outstrip newsupply this year after dry weather hurt crops of robusta, a variety of bean typically found in instant coffee and traded in London.

Marex, however, predicted that demand for robusta will outstrip new supply by 5.6 million bags, with the mild arabica variety more than filling in the gap. The arabica contract lost a few bulls last week, with 57,964 contracts betting on higher prices as of last Tuesday versus 61,181 the week before, according to data released Monday by the U.S. Commodity Futures Trading Commission.

The Hightower Report warned in a note that the contract remains vulnerable to long liquidation if the sentiment turns negative.

In other markets, raw sugar for March slumped 1.4% to close at 19.66 cents a pound, cocoa for March was up 0.5% at the close to settle at $2,415 a ton, frozen concentrated orange juice futures rose 0.4% to end at $2.154 a pound, and cotton for March lost 1% to end at 71.30 cents a pound.

Write to Julie Wernau at julie.wernau@wsj.com

(END) Dow Jones Newswires

November 29, 2016 17:43 ET (22:43 GMT)

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