Liffe front-month, December white sugar falls $14.1 to end at $606.00 per tonne on Monday. Dealers said sugar could drop further to entice physical buyers after a sharp rally to a seven-month high last week. Liffe second-month cocoa ended 19 pounds lower at 1,867 pounds a tonne, with the market focused on the start of West African main crop harvesting.
Liffe second-month robusta coffee ended $89 lower at $1,661 per tonne. Robustas fell sharply as technical selling triggered stops. Robusta coffee fell sharply as technical selling triggered stops on Monday, while sugar and cocoa also traded lower due to a stronger dollar that weighed on commodity markets.
"A lot of people have been waiting for a (commodities) sell-off," said fund manager Romain Lathiere of Diapason Commodities Management, adding the decline was linked to an expected rebound in the value of the dollar against the euro. Liffe January robusta coffee fell over 6 percent to hit a 2-1/2 week low of $1,645 a tonne after selling on the New York arabica market triggered a slide in London.
"New York has broken resistance and triggered some stops, in turn stops have been triggered in London. The problem is that there wasn't any buying below the market in London," one London-based broker said. "Roasters in London have got no inclination to buy. Roasters in New York are not as well covered," the broker added.
Dealers said recent rainfall in Brazil had also improved prospects for the flowering phase of the crop. There had been concern after a dry spell that there may not be sufficient moisture for uniform flowering.
Sugar futures slid with other commodity markets, as prices adjusted lower to entice physical buyers in a correction to a sharp rally to a seven-month peak last week. Dealers said the market could fall further. Pierre Sebag of London-based consultancy Sugar K Ltd said he believed the receiver at the expiry of the ICE October raw sugar contract last week, would be glad of the downward correction in prices, as it would make it easier to find buyers for the delivered sugar.
"The market went beyond everyone's expectations (to the 7-month peak)," Sebag said. "The receiver took the chips off the table and the market needed to go down so the goods can be sold." Sebag said he believed the market would continue to adjust lower to attract cash buyers after the rally. James Kirkup, director and head of sugar brokerage at ABN Amro Markets (UK) Ltd, said, "I think the market is correcting from overbought, very steep rallies that went on for a long time."
Dealers said cocoa is starting to flow from West Africa where the main crop officially began last week. "People are taking advantage of prices being higher. We've seen some Nigerian hedging and expect to see Ghana selling," said a London-based broker.
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