Bumper coffee crop to cut prices further after three years of falls Global coffee production is set to push inventories to a five-year high. Photo: Jane Dyson Coffee futures lost further ground this week, capping the longest run of annual declines since 1993, on concerns that a global glut will increase as crop conditions improve in Brazil, the world's biggest producer and exporter of arabica beans. Arabica coffee for March delivery fell 3.5 per cent to $US1.107 a pound on the ICE Futures in New York, the biggest drop since November 22. The price fell 23 per cent in 2013, the third straight annual decline. The commodity is now down 54 per cent since the end of 2010. Widespread rain in the next several days in Brazil's Sao Paulo and Parana states would aid plants by increasing soil moisture, MDA Weather Services in the US said. Brazil's crop is expected to reach 49.2 million bags (a bag weighs 60 kilograms), higher than a previous estimate of 47.5 million bags, according to Conab, the government's forecasting agency. Global production is set to exceed demand for the fourth straight season, pushing inventories to a five-year high, the US Department of Agriculture says. The glut is helping to cut costs for US cafe chains, such as Starbucks and Green Mountain Coffee Roasters. "There's just too much coffee around," said Michael Smith, president of T&K Futures and Options in Florida. A better crop outlook in Brazil is certainly pushing prices lower. Global production, including the robusta variety that accounts for about 42 per cent of supply, would exceed demand by 6.04 million bags in the 2013-14 season, compared with a surplus of 11.06 million a year earlier, the US Department of Agriculture said. Inventories would reach 36.33 million bags, the highest since the 2008-09 season. Arabica, grown mainly in Latin America, is brewed by specialty companies, including Starbucks. Robusta, used in instant coffee, is harvested in Asia and parts of Africa. Robusta futures for March delivery fell 0.6 per cent to $US1683 a tonne on the NYSE Liffe exchange in London. The robusta price dropped 13 per cent in 2013 after climbing 6.3 per cent in 2012. Vietnam is the biggest producer, followed by Brazil. The arabica premium to robusta averaged US42.41¢ a pound in 2013, down from US84.16¢ in 2012. Bloomberg