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.