To: Graystone who wrote (70870 ) 8/4/2001 11:39:48 AM From: long-gone Respond to of 116815 Friday August 3, 3:33 pm Eastern Time Coffee prices seen headed to lowest in a decade By Bruce Kamich NEW YORK, Aug 3 (Reuters) - Coffee prices appear headed to their lowest level in a decade or longer, as stepped-up production by Vietnam and other countries keeps feeding a worldwide supply glut, analysts said Friday. The gradual slide in prices started about 20 months ago and there is no end in sight. On Friday, in trading at the Coffee, Sugar & Cocoa Exchange (CSCE) in New York, the futures contract to deliver arabica coffee in September touched a fresh low of 49.80 cents per pound. Benchmark September ended the session at 50.40 cents, down 0.05 cent. Still, the earlier price pierced the 50-cent level seen by participants as a psychological support for the market, as selling by producers and speculators overwhelmed limited buying by coffee roasters as the hot summer weather slows consumption. The imbalance of the increased supply with demand by coffee consuming countries such as the United States reflects higher production by countries like Vietnam -- which only began significant exporting of coffee five years ago -- as well as the failure of price support programs such as the ``export retention'' plan put forward by the Association of Coffee Producing Countries (ACPC). As a result, market participants have no reason to believe the price decline will end anytime soon. ``We are headed down to 48.10 cents and possibly 45 cents. Producers still have fixing to do and the London coffee market looks very grim,'' Ann Prendergast, an analyst with commodity broker Refco Inc., told Reuters in a phone interview. Coffee prices have been in a nearly uninterrupted decline since December 1999. Major U.S. coffee roasters and other big customers have several months of inventory built up. That has given them the luxury of waiting for prices to slip further before topping up their stockpiles. Meanwhile, the retail price of canned coffee has edged lower in the past 18 months, with the market leader, Folgers, part of Procter & Gamble Co. (NYSE:PG - news), having reduced prices some five times. Even so, the full extent of the price declines have not been reflected in retail prices which are subject to distribution and marketing costs which have not declined. LONG WAIT EXPECTED FOR ANY PRICE BOOST With the annual Brazilian winter season nearly over, coffee prices may face a further beating. ``The market could have even a more negative tone next week as the frost season in Brazil is nearly over,'' Prendergast stated. ``If history is going to repeat itself we could go to 42 cents,'' said Judy Ganes, executive director of news and information for InterCommercial Markets Corp., a Web site for the trading of green or unroasted coffee. Brazil is the world's largest producer of arabica coffee and accounts for about a third of the world's production. Though Brazil is at the tail end of its winter season, traders know the odds are diminishing for a frost or freeze to hurt the crop and boost prices. One senior commodity broker for a major brokerage house forecasts a low of 42 cents, a level not seen since the Black Frost of 1975 when a devastating freeze destroyed about half of the coffee trees in Brazil. biz.yahoo.com