Coffee tumbles

Speculators triggered a fall in arabica coffee futures by liquidating positions on Thursday, taking one of this year's best performing commodities to a near five-month low and knocking off the seasonal frost premium on moderate weather forecasts. Robusta coffee on Liffe fell on spillover pressure and was on track for its weakest session in six weeks, while cocoa was mixed after European grindings came in slightly lower than expected.
Raw sugar on ICE Futures US fell to a 4-1/2-month low for the second day on expectations a Brazil harvest report will show strong progress. In coffee, arabica led both markets lower with dealers saying they expected the move was triggered by fund selling that set off a flurry of automatic sell orders and pushed the market below the 50 percent Fibonacci retracement of the January-April rally. Arabica futures were by far the weakest performer this session on the 19-commodity Thomson Reuters/CoreCommodity CRB Index.
Benchmark September arabica futures on ICE sank 9.90 cents, or 5.7 percent, to settle at $1.63 per lb, after falling to $1.6280, the lowest level for the second-position contract since February 20. "It was spec liquidation ... probably someone just exited," a London-based broker said. Liffe September robusta coffee closed down $47, or 2.3 percent, at $2,009 a tonne.
In cocoa, ICE second-month cocoa settled down $6, or 0.2 percent, at $3,081 per tonne, while Liffe September cocoa turned up late in the session to finish up 3 pounds, or 0.2 percent, at 1,915 pounds a tonne. European second-quarter grindings fell 0.7 percent from the same period last year, slightly weaker than traders' expectations for flat to 2 percent higher.
"North America is expected to be up 2 to 3 percent and Asia is expected to be up about 5 percent," said Jonathan Parkman, joint head of agriculture at broker Marex Spectron, adding that new capacity coming online in Asia could alter this. ICE October raw sugar ended down 0.13 cent, or 0.8 percent, at 17.29 cents per lb. As the market closed, Brazil's industry association Unica stated that its main center-south cane crop crushed 44.1 million tonnes in the second half of June, up from the 41.5 million tonnes two weeks prior, within expectations.
"We're in a period when stocks naturally build but they're building at a faster rate than last year due to the combination of surging production and slack export demand," one European analyst said. Liffe August white sugar closed down $5.50, or 1.2 percent, at $453.50 per tonne.