US coffee futures finished at eight-week lows in a moderate decline on Thursday, as some funds continued their technical selling amid a lack of fundamental reasons to buy, traders said.
"Funds are still selling off long positions and also you had some new shorts being put on since the market broke down yesterday and closed so badly," said one coffee dealer.
Coffee spent part of the session at higher levels, as some players thought the downside potential was exhausted with Wednesday's weak close.
"Yesterday was an outside day that closed very weak. So today was a continuation of yesterday's move.
We made new lows and that will probably discourage some buyers, but I think it was mostly just continuation selling, some long liquidation, and some new shorts being taken out," a trader said.
The New York Board of Trade's active March arabica contract fell 0.55 cent to close at 96.45 cents a lb, pushing the range low to a new eight-week low at 96.15 from a high 97.70 cents a lb.
May arabica lost 0.55 cent to end at 98.65 a lb. The rest of the board settled with 0.55 to 0.50-cent losses.
Selling was heavy, with final volume at 14,763 lots, similar to Wednesday's tally at 16,206 lots.
A lack of committed buyers has allowed sellers to dominate trade lately.
"To see it start to move higher again we'd need to see some strong buying from roasters or a decent decline in certified stocks, which is happening, but at a very slow pace.
As long as we don't see that happening we're going to see it keep going lower just because of the technical," said one dealer.
Traders have said there was no immediate support from roasters who were already stocked at favourable prices.
"The problem with coffee is that right now we don't have a lot of demand showing up and we're in the hands of the technical and technically it has proven to be very weak.
And we see people selling because of that," the dealer added.
Next downside targets were said to be sitting at 95 cents a lb, the last key support level after an upside breakout in October, one chartist said.
If 95 cents breaks, March futures may head for 90 cents a lb, he added.
Other traders said they thought the selling might be close to exhausted.
They noted that commitment of traders data released on Monday showed core long positions at their smallest level since last November, while open interest sits near low levels from October 2004.
They add that firm differential with physical coffee prices and decreased shipments from world's top grower Brazil were supporting the cash market.
US forecaster Meteorlogix said on Thursday that Brazil's coffee growing region should experience episodes of widely scattered showers and thunderstorms.
The service looks for dry conditions over the weekend. It said the increased moisture should be favourable to Brazil's budding coffee trees.