May coffee fell 410 points to settle at $1.1490, and July fell 405 points, or 3.4%, to end at $1.1540 a pound.

« Everybody’s talking about swine flu, and that’s a major factor, but I also think it has to do with the S&P 500, » said Jaime Menahem, analyst with Alaron Trading. A lower opening on Wall Street and rampant speculative sales in the commodity indexes set the bearish tone for the session. Bearish traders pressed coffee futures down into pre-programmed sell stop areas near $1.17 and $1.16 a pound, which exacerbated the selling.

Traders attempted to pare some of the losses, and industry buying lent support near the lows to prevent further declines. At the same time, the dollar came off its highs and the stock market edged into higher territory. Bearish traders regained their footing a little later in the session, however, pushing coffee futures toward their lows as the dollar mustered additional strength and equity indexes lost ground.

Sterling Smith, analyst and vice president at Futures One, said the volatility in coffee can often presage a larger move. « The market is having a difficult time getting traction, and it is developing a wide and kind of violent range, » he said. The swine flu news, while not specific to the coffee market, creates a « negative news environment that we don’t need » now, said Smith.

Flight-to-safety buying in the dollar in reaction to the news of swine flu in Mexico, the U.S. and several other countries, was a constant source of pressure in coffee futures. Colombia’s transportation ministry held talks with the truckers’ union Monday to try and end the strike that began at midnight Wednesday. So far, there is little coffee coming to market and there are enough local trucks to handle current deliveries, traders said.

The Colombian coffee harvest won’t begin in earnest until mid-May. Brazil’s green coffee exports for April 1-24 rose to 1.385 million 60-kilogram bags, up from 1.201 million bags during the comparable period in March, the Brazilian Green coffee Exporters Council said. The May/July spread widened to 50 points Monday, versus 45 points at Friday’s settlement. ICE open interest fell 288 to total 123,535 lots. Traders liquidated 237 May contracts, leaving just 949 positions open. Futures volume is pegged at 11,019 lots, with 2,694 calls and 1,042 put options traded.

ICE      Change     Range
   May   $1.1490   -410 pts  $1.1400-$1.1680
   Jly   $1.1540   -405 pts  $1.1430-$1.1765