Arabica coffee futures fell Tuesday to their lowest level in nearly a week, pressured by speculative fund-selling linked to an overall decline in commodities.
Thinly traded July lost 4.8 cents, or 2.9%, to end at $1.6150 a pound on ICE Futures U.S. Most active September fell 4.95 cents, or 2.9%, to settle at $1.6315 a pound.
Speculative fund traders sold commodities en masse, as worries over a downward correction to China's leading economic indicator sent a shudder through the markets. Commoditymarkets
, including coffee, then extended losses after a report showing U.S. consumer confidence dove to its lowest level since March.
The Conference Board on Tuesday said China's leading economic indicator grew only 0.3% in April, versus 1.7% reported earlier.
China has a substantial appetite for commodities, particularly crudeoil , soany news that its economy is sputtering is a sharp blow to potential demand.
Markets that are tied closely to global economic trends, like crude oil and copper, fell 3% and 5.2%, respectively.
Coffee futures may have been more vulnerable to the declines in the outside markets since rallying to 12-year highs just last week on chart-related buying, unfounded worries over cool weather in Brazil and scarce supplies of top-quality arabica coffee beans.
In addition, traders and analysts have been saying for some time that the ongoing Brazilian harvest, which began earlier than normal due to favorable weather and high world prices, may be finally exerting pressure on futures.
Increased origin and producer sales have surfaced recently in reaction to Brazilian coffee hitting the market and may be starting to loosen up extremely tight supplies.
Brazilian producers had harvested 32% of the arabica crop by June 23, ahead of the year-ago pace of 29%.
Most-active September coffee fell to a session low and nearly one-week low of $1.6010 a pound but recovered a portion of the losses as the dollar came off its strongest level of the session.
In addition to China's woes, bearish economic news from the U.S. caused fund traders to rush to the safety of the U.S. dollar and at the same time shun riskier commodity investments.
The Consumer Confidence Index in the U.S. plummeted to 52.9 in June from a downwardly revised 62.7 in May, the Conference Board said Tuesday.
Spencer Patton, an analyst and chief investment officer at Steel Vine Investments, said coffee futures could correct down to $1.40 a pound in the coming weeks given the increase in Brazilian supplies and the fact that futures have been "way, way overbought."
ICE warehouse stocks fell 1,525 bags to total 2.23 million 60-kilogram bags, the exchange reported.
Total open interest on ICE rose 151 to total 164,252 lots. Futures volume is pegged at 18,347 contracts traded, with 8,540 calls and 7,313 put options traded.
Thinly traded July lost 4.8 cents, or 2.9%, to end at $1.6150 a pound on ICE Futures U.S. Most active September fell 4.95 cents, or 2.9%, to settle at $1.6315 a pound.
Speculative fund traders sold commodities en masse, as worries over a downward correction to China's leading economic indicator sent a shudder through the markets. Commodity
The Conference Board on Tuesday said China's leading economic indicator grew only 0.3% in April, versus 1.7% reported earlier.
China has a substantial appetite for commodities, particularly crude
Markets that are tied closely to global economic trends, like crude oil and copper, fell 3% and 5.2%, respectively.
Coffee futures may have been more vulnerable to the declines in the outside markets since rallying to 12-year highs just last week on chart-related buying, unfounded worries over cool weather in Brazil and scarce supplies of top-quality arabica coffee beans.
In addition, traders and analysts have been saying for some time that the ongoing Brazilian harvest, which began earlier than normal due to favorable weather and high world prices, may be finally exerting pressure on futures.
Increased origin and producer sales have surfaced recently in reaction to Brazilian coffee hitting the market and may be starting to loosen up extremely tight supplies.
Brazilian producers had harvested 32% of the arabica crop by June 23, ahead of the year-ago pace of 29%.
Most-active September coffee fell to a session low and nearly one-week low of $1.6010 a pound but recovered a portion of the losses as the dollar came off its strongest level of the session.
In addition to China's woes, bearish economic news from the U.S. caused fund traders to rush to the safety of the U.S. dollar and at the same time shun riskier commodity investments.
The Consumer Confidence Index in the U.S. plummeted to 52.9 in June from a downwardly revised 62.7 in May, the Conference Board said Tuesday.
Spencer Patton, an analyst and chief investment officer at Steel Vine Investments, said coffee futures could correct down to $1.40 a pound in the coming weeks given the increase in Brazilian supplies and the fact that futures have been "way, way overbought."
ICE warehouse stocks fell 1,525 bags to total 2.23 million 60-kilogram bags, the exchange reported.
Total open interest on ICE rose 151 to total 164,252 lots. Futures volume is pegged at 18,347 contracts traded, with 8,540 calls and 7,313 put options traded.
ICE Change (cents) Range
July $1.6150 dn 4.80 $1.5885-$1.6610
Sep $1.6315 dn 4.95 $1.6010-$1.6800
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