Aggressive fund selling sent London robusta coffee futures spiralling to their weakest in just over six months on Monday, hacking nearly nine percent off prices at one point, although prices bounced off the lows, traders said.
Benchmark September delivery was down nearly $100 in just two trading sessions at its low point, as speculators threw in the towel, with a dearth of buying from roasters accentuating the sharp fall.
Second-month September finished the session at $705 a tonne, down $39 on Friday's settlement on 19,599 lots from healthy total turnover of 32,981.
Earlier, the contract fell as low as $680, scoring a lifetime low for September and scoring the weakest for a second month since November 28, 2003 on a daily basis.
Spot July, which entered its delivery period on Friday, fell $36 to close at $692 a tonne.
Traders said funds began selling on Friday after a recent squeeze in the spot July contract faded.
Many in the market had expected a large fund to take delivery of up to 30,000 lots of coffee when July entered its first notice day, but were disappointed when they finally took some 8,000 tonnes and rolled the rest over into other contracts.
"Today has not been helped by the fact that a lot of people are away. One of the reasons the market has collapsed is the lack of buyers more than anything else," one trader said.
"It seems to be recovering a bit and seems to have bounced well off the low."
New York's arabica futures market was shut on Monday for the Independence Day holiday.
Favourable weather for coffee harvesting in Brazil also contributed to the slide in prices, with the market prone to high volatility during peak frost season. The risk of frost is highest during June and July.
"I can't remember the average temperatures for this time of the year being so high," one dealer said.
Private forecaster Somar predicted on Monday that Brazil's coffee belt will avoid frost until July 21 as a couple of cold fronts pass to the south of the productive region this week.