Arabica-coffee prices soared to the highest level in over two months on Thursday as traders and investors continued to stress about the size of Brazil's current and future harvests. ICE September arabica coffee was up 4.4 cents, or 2.4 percent, at $1.8690 a pound at 1106 GMT. The crop was supported by industry outlooks that have caused worry that losses are likely to be at the high end of earlier predictions, reports Reuters.
Brazil's National Coffee Council forecasts the 2014 and 2015 coffee harvests to each produce about 40 million 132-pound bags of coffee. Its expectations for the current year is approximately 20 percent below the original forecast, as a devastating drought has curbed production.
The Wall Street Journal reports that it has been very wet in Brazil's coffee-growing areas, with rain that could trigger early blooming of the coffee trees. This would result in an even weaker coffee harvest next year.
Sterling Smith, a futures specialist at Citigroup in Chicago said "Anything that prematurely flowers right now is already going to be as nonproducer for next year. This is going to make next year's crop even more problematic," according to the Wall Street Journal.
Smith also noted that futures could reach up to $4 a pound by 2016 if the crops in Brazil continue to disappoint.
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