Arabica coffee futures fell nearly 7% on Monday as forecast for rains over parched coffee areas in top producer Brazil led speculators to sell part of their large long position in the futures.
December arabica coffee fell nearly 7%, or 9.2 cents, to a low of $1.2285 per lb, retreating sharply from last week’s eight-month peak to hit its lowest since late August.
Dealers said forecast for rains over parched coffee areas in the world’s largest producer Brazil ignited sell stops among financial investors that had built a large long position in arabica coffee futures in New York recently.
“Once the news on Brazil rains came in and funds started selling, sell stops were hit and the market went down,” said one broker.
Farmers in Brazil were concerned last week that a long dry spell would hurt the key flowering period, causing losses for the 2021 crop.
Speculators boosted their net long position in arabica coffee in the week to Sept. 8 by 3,852 to 33,092 contracts.
November robusta coffee fell $41, or 2.8%, to $1,392 a tonne.