Cocoa, coffee and sugar futures all fell on Monday, swept along with a broad-based decline in commodities led by crude oil and driven by gloom about the economic outlook in China. "A lot of funds are getting burnt. I think it is a general evacuation (from commodity markets)," one cocoa trader said.
In 2015, cocoa bucked the overall weaker trend in commodity markets as funds expecting lower output in top grower Ivory Coast to lead to a substantial global deficit in the 2015/16 season built up a massive net long position. Funds have since been scaling back that net long during the recent retreat across commodities.
March New York cocoa was off $82, or 2.7 percent, at $2,935 per tonne at 1512 GMT. The front month has lost almost $500 during the past five weeks after hitting a 4-1/2 year peak of $3,422 on December 7. Prices for London cocoa also fell with May down 60 pounds, or 2.8 percent, at 2,094 pounds a tonne. Traders said European fourth-quarter grind data, to be issued on Friday, could help stem the market's slide if it surpasses current expectations of a year-on-year rise of about two to three percent.
"Anything above 3 percent is going to be positive in the market but four days away in this market is a long time," one dealer said. March arabica coffee was off 3.90 cents, or 3.3 percent, at $1.1510 per lb. "Besides general issues such as concerns about China and risk aversion, not to mention a weaker Brazilian real, a more relaxed assessment of the coffee supply situation is also contributing to this price movement," Commerzbank said in a market note on Monday.
"For one thing, Colombia - the second-largest supplier of arabica coffee - has reported that 2015 saw the highest crop in 23 years. The problems associated with roya fungus, which had been affecting crops for years, therefore appear to have been overcome," the report said. Commodity broker Marex Spectron also said on Friday that a larger crop in top grower Brazil could create a small global surplus in 2016/17. March robusta coffee was off $28, or 1.9 percent, at $1,457 a tonne. Sugar futures were also lower with March raws off a more modest 0.6 percent at 14.38 cents a lb and March whites down 0.4 percent at $418.10 per tonne. Dealers said sugar continued to outperform many other commodity markets boosted by the prospect of a global supply deficit in the 2015/16 season.
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