Arabica coffee futures closed down more than 8% Tuesday as investors booked profits on the recent high-flying commodity amid a general bias toward assets deemed safer if the global recovery stalls.
Coffee for December delivery closed down 15 cents, or 8.1%, to $1.684 a pound on ICE Futures U.S. in New York. That's the largest one-day drop since March 2008.
"Today's selling is being exacerbated by the general liquidation in commodities," said Sterling Smith, analyst with Country Hedging in St. Paul, Minn. See more on Tuesday's action in commodity prices at Futures Movers.
Crude-oil futures fell 2%, settling at an 11-week low, after a report recording the biggest one-month drop in U.S. home resales compounded investor worries about the economy. See Economic Report for more on home sales.
Wheat, another food commodity that recently rallied on supply concerns, fell more than 2%. Stocks tumbled, while gold and Treasurys jumped. See Futures Movers for more on oil.
"We saw some fund managers taking their money off the table ... and coffee was the perfect target" following its recent run, he added.
Arabica coffee prices hit their highest in nearly 13 years on Friday, settling at $1.85 a pound. On Monday, the contract closed at $1.83 a pound after having touched fresh 12-year highs. See story on coffee's price spike.
Such volatility, however, is not unheard of in the coffee market, traders say. For starters, it's a thinly traded commodity dependant on weather trends.
December coffee had about 104,000 open-interest contracts. That compares to 327,000 open-interest contracts for October oil, and 363,000 for December gold...Read More
No comments:
Post a Comment