Coffee tumbles

ICE arabica coffee tumbled the most since August 2010 on Tuesday as investors booked profits and sell-stops deepened losses after prices failed break above technical resistance near Friday's two-year high. London white sugar rose ahead of the May contract expiry, and cocoa futures slipped under pressure from lower-than- expected Malaysian grind data.
Benchmark ICE July arabica coffee futures plunged 12.35 cents, nearly 6 percent, to finish at $1.9505 cents per lb, reversing after climbing as high as $2.10 per lb. Technical pressure offset forecasts of cold weather and unfavourable rains in Brazil, the world's biggest producer. Coffee's losses picked up at the end of the session as prices slipped below the key $2 area and hit sell-stops.
The second-month has soared some 80 percent year-to-date as a record hot January and February during Brazil's wet season transformed the outlook for world supplies and sparked uncertainty over a potential supply deficit next season. The second month peaked at $2.1090 on Friday, its highest level since February 2012. Trade buying has buoyed prices off dips in recent sessions, but attempts to climb past the key $2.10 level have failed.
"The technical traders are holding the cards right now," said Hector Galvan, a senior softs broker at RJO Futures in Chicago. Traders hold a wide range of forecasts for Brazil's coffee output, with figures ranging from around 39 million 60-kg bags to 56 million bags. July robusta coffee on Liffe closed down $6, or 0.3 percent, at $2,128 a tonne in choppy trade.
The August contract on Liffe rose $3.70, or 0.8 percent, to $467.40 a tonne, and the front-month May contract finished up $19, or 4.5 percent, to $442.20 a tonne. The front-month's discount to the second month spiked as wide as $42.80 per tonne, the biggest such discount since September 2009, before narrowing sharply to $25.20. The sharp widening of the spread over the past several sessions was seen as evidence of few interested buyers for delivery against the May contract, which expired on Tuesday.
Raw sugar prices were little-changed. The front-month May raw sugar contract on ICE inched down 0.03 cent, or 0.2 percent, to end at 16.56 cents a lb. In cocoa, the second-month July contract on ICE slipped in extremely light volumes $15, or 0.5 percent, to settle at $2,981 a tonne after Malaysia's first quarter cocoa grind was lower than expected, posting a fall of 13.6 percent. "The number was surprisingly down," a London-based broker said, but added that some processing has shifted from Malaysia to Indonesia, making the Malaysian number less significant. Liffe July cocoa futures closed down 10 pounds, or 0.5 percent, at 1,868 pounds a tonne.