Coffee futures prices declined sharply in nervous trading on the Coffee, Sugar and Cocoa Exchange in New York despite the continuing drought in Brazil. The contract for delivery in March, on which there is no daily trading limit, plunged in heavy trading by more than 17 cents a pound, and other contracts were down the 6-cent limit.
However, most of the price movement was due to speculators adjusting their positions and didn't detract from the underlying strength conveyed by the severe drought in Brazil, the No. 1 growing country, said Deirdre Macleod, an analyst in Chicago with Heinold Commodities.
The market was weakened in part by a letter from the president of Colombia to 15 major coffee producing nations, asking for the immediate elimination of export quotas, Macleod said.
Traders know that the quotas will be lifted anyway on Feb. 17, under rules of the International Coffee Organization, because of continuing high futures prices.
"But Colombia's action showed it is ready to put its stock in the market" hoping to retard price increases and hold down any loss of consumers, Macleod said.