NEW YORK/LONDON: ICE raw sugar futures dropped for the fourth straight session on Monday, but remained above a recent three-year low as the small delivery against Friday's expiry of July futures was viewed as bearish.
Arabica coffee trading on ICE Futures US turned higher in a choppy session, hovering above a four-year low as weaker currencies in coffee-growing countries attracted farmer selling and took the market off its session highs. Cocoa futures on ICE and Liffe eased on improved crop growing condition in top grower Ivory Coast.
October raw sugar on ICE settled down 0.23 cent, or 1.4 percent, at 16.69 cents per lb. Its discount to the second position contract continued to widen, reaching 0.86 cent, the biggest since September 2012, from 0.45 cent the previous session.
The July contract, which expired on Friday, fell that day up to 2.7 percent to 16.02 cents, the weakest level for the front month since July 2010.
ICE July raw sugar delivery totaled 144,026 tonnes, or 2,835 lots, exchange data showed, the smallest July delivery in seven years, with trade sources citing Vitol as the sole receiver.
The small delivery weighed on the market as so few companies were willing to receive it and the large discount of the July contract versus October encouraged many to roll their futures positions into the October contract, dealers said.
"The deliveries were small and that is working on prices," said Sterling Smith, market specialist for Citigroup in Chicago.
New selling by funds was also seen weighing on prices after market momentum shifted to neutral to slightly bearish from its recent positive sentiment, giving funds some confidence to add new shorts, Smith said.
"Any strength in futures prices will be hammered back by producer selling, especially with the weak real currency," one London-based analyst said.
The weak real boosts the income of Brazilian sugar producers in local currency because sugar is denominated in dollars.
August white sugar on Liffe ended down $2.50, or 0.5 percent, at $499.80 a tonne, after trading as high as $507.80.
"The London market continues relatively strong with the October whites premium currently at $111.50 and the front spread at $18," Nick Penney of broker Sucden Financial Sugar said.
"Demand for whites seems to be holding and this, in combination with a retracement in raws values, is keeping the whites-over-raws premium steady," he said.
This is a shorter trading week for ICE Futures US agricultural markets. They will close July 4 for the US Independence Day holiday and open late at 8:00 a.m. EDT (1200 GMT) the following day.
ICE September arabicas finished up 1.20 cents, or 1 percent, at $1.2160 per lb, above the lowest level for the second month since July 2009 of $1.1710 per lb, which was hit on June 20.
"The Brazilian real-dollar has been in focus in the last few weeks and will continue to be so," said Andrea Thompson, an analyst with CoffeeNetwork, part of INTL FCStone.
Weakening currencies in coffee-growing countries including Brazil and Colombia are expected to keep downward pressure on the market as farmers are encouraged to sell.
Liffe September robusta coffee settled up $26, or 1.5 percent, at $1,785 a tonne.
Cocoa futures on ICE were softer, with September settling down $5, or 0.2 percent, at $2,159 a tonne, just above recent 2-1/2-month lows. The market was underpinned by concerns that the clearing of cocoa farmers from protected forests in Ivory Coast could threaten exports.
Liffe September cocoa closed down 6 pounds, or 0.4 percent, at 1,452 pounds a tonne.
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