Arabica coffee futures fell Wednesday, hitting a 22-month low and US cocoa sank to a 4-1/2-month low, as investors sold a broad range of commodities in a flight to safety due to mounting worries about the euro zone. Sugar futures bucked the downward trend, and were little changed in choppy dealings, with support seen from trade buying.
"The situation in Europe is continuing to plague every market whether they have strong fundamentals or not," said Sterling Smith, market analyst with Citibank in Chicago.
Arabica coffee futures on ICE dropped to the lowest level since July 2010, with more pressure from the beginning of what is widely expected to be a bumper harvest in top grower Brazil.
Benchmark July arabica finished down 1 cent at $1.6440 per lb, its lowest settlement since August 2010 for the spot position, after falling to a 22-month low at $1.6230. "Right now it's money flows. With the dollar gaining so much strength everyone is just stepping back so you can't find any willing buyers so everything gets hit, and hit extraordinarily hard," Smith said. Arabica's slump has narrowed its premium over Liffe's robusta coffee to the lowest since September 2009. The arbitrage has narrowed nearly 20 percent in the past week after robusta futures soared in a sustained rally to an 8-1/2-month high on Monday, supported by tight European stocks.
Robusta coffee on Liffe also slipped on broad-based pressure, with July c losing down $28, or 1.3 percent, at $2,213 a tonne, having touched $2,269 on Monday, the highest level for the second month since September 2, 2011. Cocoa futures fell under pressure from the firmer dollar as well as concerns about the reforms in the Ivory Coast, where a fixed cocoa price for farmers will be introduced from October 1.
The ICE cocoa futures July contract fell $40, or 1.9 percent, to finish at $2,070 a tonne, the lowest settlement for the spot contract since January 6. London September cocoa ended down 19 pounds, or 1.3 percent, at 1,448 pounds per tonne, its lowest close since April 12.
Raw sugar futures on ICE drifted in a range in subdued dealings. ICE July sugar futures inched down 0.05 cent to settle at 19.48 cents per lb, having touched 19.36 cents per lb on May 23, the lowest level since August 2010. Open interest in the raw sugar market stood at 753,540 lots as of May 29, the highest since mid-March 2010, ICE Futures US exchange data showed. London August white sugar inched up 10 cents to settle at $556.60 per tonne.
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