Benchmark arabica coffee futures tumbled more than 4 percent to a five-month low on Thursday, depressed by a combination of fund liquidation, weak technical signals and limited roaster buying, traders and analysts said.
The New York Board of Trade's active coffee contract for July delivery fell 4.55 cents to end at $1.0445 per lb, near the floor of a trading range from $1.0430 to $1.10. It was the lowest settlement for the contract since December 16, 2005.
Among other arabica contracts, September slid 4.50 cents to finish at $1.0725 a lb. and back months shed 4.35 to 4.60 cents.
"We had fund and speculative selling," said Boyd Cruel, a commodity analyst at Alaron Trading. "It was option-related. We hit $1.10 (in July contract), ran into some selling there and the market has just been hitting stops," he said.
The benchmark July contract had been drifting aimlessly between $1.0625 and $1.1770 since March 1. Automatic stop-loss orders were triggered when it broke below $1.0625.
Market sources said coffee roasters had enough near-term coffee, making it difficult for importers to sell coffee before the onslaught of top coffee producer Brazil's new arabica harvest in June. "(The importers) can't move coffee and they are very nervous about it," a coffee buyer said, asking not to be named.
"The roasters are fixed nearby - they are out of the market," he said.
Rodrigo Costa, a vice president at commodity brokerage Fimat USA, said roasters have been buying, but on a scale-down basis ahead of the Brazilian arabica crop.
"You have the Brazilian crop knocking on the door and there is no cold weather.
Even if the crop is not that big they are still going to have to sell it," he said.
US forecaster Meteorlogix predicted it would be mostly dry in Brazil's coffee belt during the next seven days, with low temperatures ranging from 45-55 F (9-13 C).
Technically, Costa put support in July coffee at $1.0260 and then $1.00 with resistance at $1.0630 and then $1.0980.
Trading volume reached an estimated 22,810 contracts, doubling the official count of 10,666 contracts the previous day, New York Board of Trade data showed.