Most soft commodity futures fell on Thursday, with investors disappointed over remarks by European Central Bank President Mario Draghi that no immediate measures were planned to stem the debilitating euro zone debt crisis. Draghi said the ECB would draw up a mechanism to make outright debt purchases to stabilize peripheral euro zone states' borrowing costs.
Investors were also skittish ahead of the release of US jobs data on Friday. "I don't think anyone is feeling risk aggressive," said Sterling Smith, vice president of commodity research at Citibank's Institutional Client Group. Broad economic weakness also weighed on the softs complex.
Benchmark October sugar futures on ICE fell 0.52 cent or 2.3 percent to finish at 22.04 cents per lb. White sugar October futures on Liffe declined by $11 or by 1.77 percent to end at $610.50 per tonne. Losses in sugar futures were capped by concerns over weak monsoon rains in No. 2 producer India, plus the risk of the El Nino weather phenomenon curbing production if it causes excessive rains in Latin America and especially top grower/exporter Brazil.
India's monsoon rains are now expected to be deficient in 2012, the weather office said on Thursday, signalling the first drought in three years as a nascent El Nino could crimp rains in the second half of the June to September season. On a technical level, Smith believes raw sugar, basis October, is trapped between 22 and 23 to 24 cents. "We expect resistance in the market around 23 cents and believe it's safer on the sell side than buy side," said Thomas Kujawa of brokerage Sucden Financial.
Cocoa futures also extended losses below multi-month highs as the dollar strengthened after Draghi's comments, and were supported by worries over the potential impact of El Nino on output in West Africa, the world's main cocoa growing region. ICE September cocoa futures fell $32, or 1.3 percent to end at $2,369 per tonne. London December cocoa eased 7 pounds to close at 1,630 pounds per tonne, after hitting an 8-1/2 month high at 1,641 pounds, basis second month, before Draghi's remarks. September arabicas on ICE dropped 2.95 cents or 1.7 percent to close at $1.7165 per lb. November robusta coffee futures added $7 to finish at $2,199 per tonne.
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