Coffee Drops 5% In London As Funds Sell

World coffee markets tumbled on Friday as commodity funds led a sell-off that took prices down again after a spectacular rally this year.

Londons futures for robusta type beans fell by five percent to $1,530 per tonne for May delivery in early Friday trading.

Latest losses followed a drop in New York futures for arabica beans on Thursday on fund long liquidation on talk of a rise in US stocks of coffee. Prices for the May delivery dropped some eight percent to 177.70 cents per pound.

Coffee futures prices, propelled by tight supply of the arabica beans - the premium coffee - from South and Central America, had soared by more than 50 percent this year.

The rally, also driven by the funds, forced leading US and European roasters (processors) to hike coffee prices on the supermarket shelf. US futures had topped $2.00 for the first time since 1994 when frost hit Brazil.

But a combination of a build in stocks, higher sales by producers and consumer resistance to higher retail prices has now started to depress the market again.