US arabica coffee slid to close down 3.7 percent at a five-week low Monday after long liquidation triggered sell-stop orders, traders said.
"Most important was to see the COT (commitments of traders report) showing funds longer in the market. Since they were long, pretty much what we saw was New York ... coming off on long liquidation," one trader said, adding stops were hit in the benchmark contract below $1.15.
Speculator and investment funds increased their long positions to 9,173 lots in the week ending June 19 from 7,292 lots, the weekly Commodity Futures Trading Commission report showed on Friday.
New York Board of Trade open-outcry July coffee fell 3.60 cents to $1.1000 per lb, while benchmark September slid 4.25 cents to end at $1.1115 which was a low last seen May 18 for the second month, after trading in a wide band from $1.1430 to $1.1100 which marked a low dating back to May 17. The rest retreated 4.10 to 4.25 cents.
On the IntercontinentalExchange NYBOT electronic platform at 2:05 pm EDT (1805 GMT), September was 4.10 cents lower at $1.1130 a lb. Producers in top coffee grower Brazil will sell their coffee at a government price-support auction for 4 million 60-kg bags of arabicas on Wednesday, something expected to sustain prices at a profitable level.
Some speculative selling weighed on NYBOT futures, however, in response to talk that some exporters and roasters will fight the program, dealers said. "It seems we might test the $1.10 even on September before we find any good support," one trader said, looking toward Tuesday's trade.
Robusta coffee futures in London finished down, with prices driven lower by speculative selling while industry support emerged at the lows, dealers said. Liffe September settled down $26 at $1,888 per tonne after trading $1,880 to $1,917.
Meanwhile, a second cold front was due to pass through southern Brazil late this week, bringing further showers and cool, cloudy weather, but no risk of frost, private weather service Somar said on Monday. Temperatures began dropping on Sunday and cloud cover intensified with the arrival of the first cold front in southern Brazil. Some trace showers fell in the region, but no significant rain was expected in the coffee belt.
NYBOT estimated 4,845 lots traded in New York open-outcry while traders said about 18,000 contracts had dealt on the ICE screen by 1:20 pm. This compares to the 3,429 lots officially tallied in floor trade on Friday, when 9,070 contracts traded on the ICE electronic platform. As of June 22, open interest fell 210 lots to 149,150 contracts.