World coffee prices tumble

World coffee prices tumble

LONDON (Reuter): Coffee prices were sent tumbling down on Monday as fund investors clamored to sell and maximize profits from extraordinary gains so far this year.

Benchmark robusta coffee futures on the London Commodity Exchange (LCE) dived by 7.7 percent or US$128 to the day's low before recovering slightly to close at $1,540, down $123.

The drop was largely spurred by worries over weak technicals, analysts said, though the arrival of the main Indonesian crop in the coming weeks and signs that supply of arabica coffee might ease also added to the downward pressure.

"Obviously, people turned negative quite quickly," one analyst said. "Sentiment has changed."

The drop was made all the sharper by a report from U.K. trade house E D & F Man on Monday which suggested an easing of the coffee supply situation in the United States, traders said.

Cocoa also slipped lower in London and then in New York as traders worried that a possible drop through technical support levels might spark a pronounced sell-off.

LCE Cocoa May futures shed 13 sterling to close at 1,005. But technical analysts said the gap between 982-989 sterling could trigger further falls if it was breached.

Copper was boosted in early trade by reports that Chinese buying would continue. Some traders said the buying was part of a program, with the country needing regular shipments of refined metal.

"The Far East is busy at the moment, and it is China... they are short of copper," one European physical trader said.

But copper could not sustain its early gains and fell to $2,367 from its high of $2,390, dragging aluminum and zinc in its wake.

Aluminum chugged up to $1,670 before slipping back to $1,657 at the close while zinc topped the $1,300 level at $1,301 before retreating to 1,294.

Copper stock figures would be closely watched on Tuesday to see if more copper moves from Singapore into China after 6,175 tons took that route last week.

Volume was thin in most commodities, apart from coffee, as traders held their positions in the run-up to a four-day weekend in Britain, starting on Friday.

Soybeans took a hit on the Chicago Board of Trade (CBOT), shedding 9-1/2 cents to $8.33 a bushel by 1742 GMT as technical worries and forecasts of warm weather in the main growing areas prompted market jitters.

Gold suffered from speculative selling but later clawed its way back above the psychologically important $350 level.

Bullion hit a low of bid of $348.55 before rebounding to fix at $350.20 an ounce compared to 350.65 in the morning. Market nerves were on edge ahead of Tuesday's over-the-counter options expiry and a possible U.S. interest rate hike by the Federal Open Market Committee, dealers said.

Meanwhile, IPE Brent Crude was kept under downside pressure by weak fundamentals with the physical brent market well supplied, despite concerns about disruptions to crude production in Nigeria.