London soft commodities ease

Coffee, cocoa and sugar prices eased on Thursday as a strong dollar and weak equity markets weighed on soft commodities, dealers said. "The dollar has obliterated everybody," Lars Steffensen, managing director of London-based commodities fund Ebullio Capital Management, said. "There is plenty of room on the downside. People haven't got to the softs yet," he added, predicting further falls in prices.
He said a tighter supply outlook in soft commodities than in metals had limited the selling momentum so far, but in the end the gloomy macroeconomic outlook would drag softs lower. Fear of global recession battered stock markets again on Thursday while a flight from emerging market debt and stocks helped push the dollar to a two-year high against major currencies.
Weak Japanese export data, bleak outlooks from carmakers and news of job cuts at Goldman Sachs and Chrysler deepened fears of an extended global recession and sent most markets lower again. January robustas in London were off $29 or 1.65 percent at $1,732 a tonne at 1428 GMT, while December arabicas on ICE fell 1.6 cents or 1.4 percent to $1.11 per lb.
Dealers said roasters had extended cover during the slide in prices and appeared to be under little pressure to buy. "I think we are stuck in a situation where the industry has (already) bought and it is a question of whether origin are going to come around to the idea that they better do some selling," one coffee dealer said.
Vietnam's coffee exports this month are forecast to rise 9.8 percent from the same month last year to an estimated 45,000 tonnes, or 750,000 bags, the government's statistics office said on Thursday. Cocoa futures also declined, although scaled down industry buying helped to limit losses. December cocoa on ICE fell $14 to $1,982 a tonne, while March cocoa in London slipped 4 pounds to 1,286 pounds a tonne.
March raws on ICE fell 0.14 cent to 10.82 cents a lb while December whites in London eased $5.00 to $308.60 a tonne in slim volume of 1,284 lots. On Thursday, Merchant Czarnikow cut its forecast for 2008/09 (April/March) sugarcane production in the centre-south of Brazil to 475 million tonnes from a previous prediction of 485 million tonnes.