Sugar at multi-month lows, cocoa tumbles
Sugar futures dropped to multi-month lows on Tuesday as slow demand on the physical market and build…Sugar futures dropped to multi-month lows on Tuesday as slow demand on the physical market and building world stocks weighed on prices, while ICE cocoa made its biggest tumble in 3-1/2 months on currency pressure. Coffee on ICE Futures US and Liffe were also lower. Soft commodities fell in line with the 19-commodity Thomson Reuters/CoreCommodity CRB Index, which dropped 0.5 percent to a 6-1/2-month low as the strong US dollar
against a basket of currencies attracting selling by investors holding other currencies. In raw sugar, benchmark ICE October futures settled down 0.21 cent, or 1.3 percent, at 15.47 cents, having dipped to 15.44 cents, their lowest since February 12. "Physical values in Brazil crept lower this week even in the face of the futures decline," a European trader said. "The problem we have is that the sugar is coming in Brazil at a very quick pace, at a time when the world market just doesn't need it."
October white sugar on Liffe closed down $5.30, or 1.2 percent, at $420.10 per tonne, after falling to $419.50, the lowest since January 31. Cocoa futures on ICE fell from a more than three-year high reached on Monday, having steadily climbed since the start of the year on expectations of a third consecutive global deficit. Benchmark ICE December cocoa futures settled down $56, or 1.7 percent, at $3,204 per tonne, having hit $3,269 on Monday, the highest since May 2011.
The market was weighed down by the sharply lower sterling versus the US dollar as well as sell-stop orders below $3,239 and $3,229. "Some system long liquidation and some discretionary funds are shedding length," said one US trader. "This market had been overbought for a while, so it's corrective." Liffe December cocoa futures ended down 20 pounds, or 1 percent, at 2,024 pounds per tonne. In coffee, ICE December arabicas fell 6.95 cents, or 3.6 percent, to finish at $1.8615 per lb.
The market maintained its volatility on uncertainty about top grower Brazil's crop following a drought. CoffeeNetwork, part of INTL FCStone, maintains its 2014/15 Brazil crop forecast of 50 million 60-kg bags. CoffeeNetwork's head of research and analysis, Andrea Thompson, said that a timely start to the wet season, due to begin mid-September, was vital to Brazil's 2015/16 crop. November robusta futures on Liffe ended down $9, or 0.5 percent, at $1,947 a tonne. CoffeeNetwork expects top robusta grower Vietnam will produce 30 million bags in 2014/15, up from 28 million the previous year.
