New York cocoa sinks to multi-month lows

Cocoa futures on ICE sharply extended losses to multi-month lows on Tuesday, weakened by generally favorable crop conditions in West Africa that heightened the prospect of a second consecutive global surplus in 2017-18. March New York cocoa settled down $71, or 3.5 percent, at $1,932 per tonne in heavy volume, after sinking to $1,912, the weakest for the second month since Sept. 11.
The settlement is roughly a $19 premium to London, down from roughly $35 on Monday. March London cocoa settled down 41 pounds, or 2.8 percent, at 1,424 pounds per tonne, after falling to lowest since May 5 at 1,408 pounds. Both markets fell for the fourth straight session, taking London cocoa into technically oversold territory around 23 on the 14-day relative strength index, the lowest since April on a continuation chart. New York cocoa fell below 32 on the index, the lowest since May.
"I don't really see any reason to buy at the moment. I think the crop is going pretty well and we've a huge surplus from the previous season," one dealer said. Dealers noted that the current premium for New York over London remained unusually high, with prices in Europe depressed by supplies of cocoa from Cameroon which is considered a less desirable origin than Ivory Coast or Ghana.
"The Cameroons, which no-one really wants, are weighing on London," one dealer said. January robusta coffee settled up $35, or 2 percent, at $1,757 per tonne as prices hovered above last week's 17-month low at $1,699. Total open interest fell for the 20th straight session to reach 192,044 lots on Monday, exchange data showed.
"The expectation of a high robusta crop in Vietnam (where harvesting has just begun) and the prospect of a significantly better robusta crop in Brazil next year are already priced in," Commerzbank said in a note. March arabica coffee settled down 1.1 cents, or 0.9 percent, at $1.274 per lb.
March raw sugar settled down 0.16 cent, or 1.1 percent, at 14.9 cents per lb. "The consensus is formed on a strong global demand/supply sugar surplus for 2018-19 based on good northern hemisphere crops and reduced (center-south Brazil) sugar production," said Nick Penney, senior trader for Sucden Financial, in a note. March white sugar settled down $3.4, or 0.9 percent, at $383 per tonne.