Benchmark arabica coffee futures settled down 2.4 percent at a nine-month low on Tuesday, depressed by fund selling amid deteriorating technical signals on the price charts and broad weakness in the commodity sector, traders said.
The New York Board of Trade's active coffee contract for July delivery shed 2.35 cents to finish at 96.10 cents per lb after trading from 95.50 cents to 98.60 cents. It was the contract's weakest ending since September 27, 2005.
September coffee likewise slipped 2.35 cents to end at 98.90 cents, while longer-dated arabicas fell 2.35 to 2.65 cents. "It was mostly spec selling. Technically, the market doesn't look very good," said a coffee trader at a commodity brokerage.
"The specs are profit-taking and the funds are going short," he said. Coffee futures slumped in line with most other commodities, as traders grew wary that talk of rising US inflation might lead to higher interest rates and dampen economic growth.
Trading, the Reuters/Jefferies CRB Index of 19 commodity futures was trading down 5.70 points or 1.6 percent at 343.08. "The funds are realigning their bets their portfolio allocation," said Rodrigo Costa, a vice president at Fimat USA.
"Some system funds came to sell the market, but I think it had to mostly do with the CRB (sell-off)," he said.
Costa said speculators had sold about 4,000 lots of coffee futures, putting the non-commercial net short position of coffee futures at about 7,000 to 8,000 contracts. On the price chart, Costa put the next technical support in the July contract at 95 cents and then 94 cents with resistance at 98.60 cents and then $1.
Elsewhere, the Life's benchmark robusta coffee contract tumbled 3.9 percent to finish at $1,120 a tonne. Arabica futures trading volume reached an estimated 33,375 lots on the NYBOT, more than double the 14,313 lots officially tallied the previous session.