ICE raw sugar fell to near a three-year low on Thursday as cane harvesting in top exporter Brazil ramped up, while cocoa futures on ICE and Liffe also posted steep daily losses amid technically driven speculator selling, dealers said. ICE arabica posted a third straight daily loss as short-covering dried up and producer selling picked up.
July raw sugar futures on ICE Futures US fell 0.12 cent, or 0.7 percent, to finish at 16.83 cents after touching 16.81 cents a lb, the front-month contract's lowest price in almost three years. "We are seeing a gradual erosion in sugar prices, not a collapse," said Pierre Sebag of consultant Sugar K Ltd, referring to growing supplies of new-crop Brazilian cane entering the market. Traders gathered for New York Sugar Week said they were bearish on sugar prices, with many saying prices would continue to drift to as low as 16 cents a lb.
Copersucar's chief executive said on Wednesday that ethanol demand in Brazil was providing a "soft landing" for global sugar prices as increased demand from Brazil's biofuel industry is expected to divert bumper cane output away from sugar production and help eat into a global surplus of the sweetener. A hefty Mexican sugar surplus and bigger-than-expected Thai and Indian output are also weighing on prices. August white sugar on Liffe closed down $1.40, or 0.3 percent, at $476.20 a tonne after mixed trading.
"We expect the downward trend in both markets to continue and it will be the refiners and end users who will have to absorb the surplus at some stage," said Nick Penney of brokerage Sucden Financial Sugar. Investor selling pulled down the ICE July cocoa contract by $50, or 2.1 percent, to settle at $2,294 a tonne, the contract's largest one-day loss since early March. "It looks like profit-taking is setting in here after the recent rises seen in the market," a London-based cocoa futures broker said.
Liffe July cocoa futures sank 37 pounds, or 2.4 percent, to finish at 1,529 pounds per tonne, the front-month contract's largest one-day loss since January. "There was some artificial support from the May contract and once we got past that, we're seeing speculator liquidation," said Sterling Smith, a futures specialist at Citigroup in Chicago, referring to strength in the May contract earlier this week as it moved into a premium against the July contract.
A total of 34,530 tonnes of cocoa were tendered against the May contract on Liffe, which expired on Wednesday, according to exchange data issued on Thursday. ICE July arabica coffee futures fell 0.7 cent, or 0.5 percent, to $1.3985 per lb. The Brazilian government said the country would harvest 48.6 million 60-kg bags of coffee in the 2013/14 crop year, the largest amount ever for an off-year crop. Dealers monitored risks of frost in top producer Brazil, which helped prices to recover from a near three-year low of $1.3270 per lb touched on April 29. Liffe July robusta coffee finished down $8, or 0.4 percent, at $2,046 a tonne.
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