Coffee futures plummeted Tuesday due to selling by commercial and noncommercial traders. Despite a dip in futures spreads, the market remains in backwardation, indicating bullish long-term supply and demand. A friend in Nebraska noticed the market’s sharp decline, with March down 4.9%, May down 4.5%, and July down 4.2% per pound.

Weather patterns in Brazil led to the market drop, with the country being the world’s top coffee producer. Despite this, the forecast predicted continued rain, increasing Brazil’s production potential. The market’s forward curve remains strong, showing bullish long-term supply and demand, with global demand for coffee still high.

The latest report showed noncommercial traders holding a net-long position of 32,734 contracts, an increase from the previous week. The May issue maintained Tuesday’s low, and stochastics indicated a potential trend reversal. Looking at technical analysis, a possible price support level exists just below 290.00, making the risk-reward ratio attractive for buyers.

Read more at Yahoo Finance: What Cooled the Coffee Market Tuesday?