Sugar, cocoa and coffee futures fell on Tuesday, tracking losses in many other commodities and oil, as a firm dollar helped fuel fund long liquidation. "Having been the hot ticket in the first half of the year, commodities are now seen as a sick dog," trade house ED&F Man said in a report on Tuesday.
Sugar futures extended the steep losses of the last few days with oil and the dollar still the key influences. "We tend to follow the ups and downs of outside markets and the screen today seems to be mostly red, especially the energy complex," one dealer said.
October whites in London was off $5.20 at $367.20 a tonne at 1503 GMT after touching $363.30, the lowest level for the contract since late July. The front month had risen as high as $425.00 in late August before the commodities sell-off. March raw sugar on ICE fell 0.22 cent to 13.78 cents a lb and some dealers expected the market to fall further in the near future.
Dealers said, however, market fundamentals were improving with the sugar market set to move into deficit in 2008/09. Trade house ED&F Man forecast on Tuesday a shortfall of 706,000 tonnes in 2008/09 compared with a surplus of 11 million tonnes in 2007/08. Analyst F.O. Licht on Tuesday also projected that European beet sugar production would fall in 2008/09 to 22.53 million tonnes from 26.52 million in the prior year.
Cocoa prices also fell but scale-down industry buying helped to limit losses. December cocoa in London was down 16 pounds at 1,496 pounds a tonne. The contract traded as high as 1,667 pounds early last week but has fallen sharply in the broad-based fund sell-off of commodities.
Dealers said industry buyers had taken advantage of the fall in prices to take additional cover. Robusta and arabica futures also fell. November robustas in London slipped $10 to $2,153 a tonne and now stands well below last week's peak of $2,342. Arabica futures on ICE were lower with December down 2.60 cents at $1.4045 a lb.
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