Liffe December white sugar ended $0.50 lower at $607.80 per tonne on Monday. Forecasts for substantial rains in Brazil's sugar cane belt, interrupting a long dry spell that worried producers, helped to erase earlier gains.
Liffe December cocoa ended 19 pounds lower at 1,865 pounds a tonne. Market weighed by favourable prospects for main crops in West Africa. Liffe November robusta coffee settled $15 lower at $1,654 per tonne, dragged down by sharp setback in ICE arabicas.
"We feel there is more to come from the speculative community and buying will not readily be absorbed by producer selling," a Sucden Financial sugar report said. "The direction of the markets will still be higher in the medium term." Dealers noted the supply outlook remained tight. "We're getting close to the October expiry (in raw sugar). I'm beginning to think that there are quite a few people wanting to receive delivery against the October contract, so I think they're being forced to bid up the market," Doug Whitehead, analyst with Rabobank in London said.
"Very tight market conditions (in sugar) are expected into the first half of next year," Whitehead added. Coffee production is recovering this year in Colombia, the world's No 3 coffee exporter, after output fell to three-decade lows in 2009 due to drought and a crop renovation programme. London cocoa futures resumed their downtrend after stabilising last week.
Liffe cocoa has lost over 20 percent of its value since hitting a 32-year peak of 2,465 pounds a tonne in July on improved crop prospects for the world's largest producing region West Africa. "I don't see a lot of upside potential but the market is looking oversold," Standard Chartered's Ofon said. "There's only a small opportunity for prices to rally before West Africa's crop comes on-stream... unless we see delayed harvests or administrative bottlenecks."
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