Coffee led a retreat in farm commodities, slumping 8% in London, undermined by a broad retreat by investors from riskier assets, accelerated by the triggering of a barrage of automatic sell orders.
Many commodities fell on Tuesday as investors opted for safe assets, including the dollar, which hit its highest level against a basket of currencies for more than a month.
Oil was 1.1% lower at $72.27 a barrel at 12:00 GMT, while Chicago corn lost 2.2% to $4.08 a bushel despite official meteorologists in China, the second biggest consumer and producer of the grain, forecasting that excessive rains over the next 10 days would damage crops.
Gold, often counted as a safe haven, was also caught in the sell-off, easing 0.5%, while Chicago wheat lost 1.8% to $6.79 ½ a bushel.
'Largely technical'
However, the most notable decline was seen in London robusta coffee beans which slumped by $138 a tonne to $1,599 for September delivery, the first time a spot contract had fallen below $1,600 a tonne for two months.
The extent of the fall was blamed on a vicious circle of sales triggering pre-set sell orders which, in a market traders have flagged for its lack of volume in recent days, exacerbated the move.
"It's largely technical at the moment. Technical levels were breached, and sell stops were hit," a London soft commodities trader told Agrimoney.com.
'Telling volatility'
The comments were echoed by Jake Weatherall at Rabobank, who said that similar dynamics had also been seen in at work in sugar, which fell 4.1% in New York to 19.25 cents a pound.
"Coffee was particularly heavily sold, when sell stops were hit in an illiquid market, We saw sell stops hit in sugar too," Mr Weatherall said.
On Monday, Ralph Hawes at Sucden Financial warned over the low volumes in coffee markets, terming "negligible volumes" as an "all too familiar" characteristic, promoting price swings.
In New York, "the volatility can be particularly telling during [UK] morning sessions, before the US is effectively open for business", he added.
Corn condition
Among grains, wheat's weakness was attributed to profit-taking provoled by improved prospects for autumn sowings in Russia, following rains in some areas hit by the country's worst drought on record.
"Conditions for harvesting and winter grain sowing will be generally satisfactory in most of the non-black earth zone" until the end of August, the Hydrometcentre weather bureau said, denoting an area of Russia including dry northern and Volga valley areas.
However, winter planting conditions in central black earth region in European Russia, which fared relatively well this harvest, would be worse than average because of a water deficit, the Moscow-based bureau said.
In Kiev, consultancy Agritel said that the rains which had improved seeding prospects "have left Ukrainian territory, and a clear sky can be observed this morning with temperatures between 25-31 degrees Celsius".
