Coffee prices collapsed 50.1 cents over a seven-day period ending February 4, with the most active March contract closing at 317.1 U.S. cents per pound.

The sharp decline follows a period where market analysts had anticipated continued upward momentum. Previous expectations called for technical buying to push prices toward the 365-370 cent range, but the market moved in the opposite direction as multiple factors converged.

Roaster fixations completed ahead of index roll

The primary driver of the price decline was the completion of roaster fixations for the March contract. Roasters successfully reduced their exposure before the index roll period, eliminating the cyclical pressure of fixing positions before first notice day.

Earlier market assessments had assumed roaster fixations would support prices through the index roll period. However, this buying activity concluded earlier than anticipated, removing a key source of demand that had been supporting the market.

Broader commodity weakness adds pressure

General negative macroeconomic performance contributed to weakness across commodity markets during the week. Coffee prices moved in line with broader commodity declines as macroeconomic conditions weighed on market sentiment.

The commodity-wide selling pressure compounded the specific factors affecting the coffee market, accelerating the downward price movement.

Exchange inventory begins to rebuild

Long-anticipated coffee supplies intended to refill exchange pipeline inventory have begun arriving. The appearance of these coffees marks a shift in the physical supply situation that had been supporting elevated price levels.

The convergence of completed roaster buying, broader commodity weakness, and arriving exchange supplies created conditions for the substantial price decline. The market had been balancing between pricing tight nearby supply and more ample forward supply before these three factors aligned simultaneously.

Technical outlook points to further downside

The extent of the price decline has damaged technical chart patterns, creating conditions where long speculators face difficulty maintaining positions. Market analysis anticipates prices heading lower toward the $3.00 level before stabilizing by the end of the week.

The projected move to $3.00 represents an additional decline of approximately 17 cents from current levels and would mark a significant retreat from recent price peaks.


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