Raw sugar futures on ICE declined sharply on Tuesday, largely tracking the fall in crude oil prices, while cocoa and coffee also fell. March raw sugar settled down 0.34 cent, or 2.7 percent, at 12.46 cents per lb. Prices touched an Oct. 5 low of 12.36 cents per lb.
"With crude oil down pretty good and the gasoline market down pretty good too, it's weighing on sugar. And the dollar has turned higher, so that's hurting all the softs," said Jack Scoville, a vice president at Price Futures Group. "There seems to be some macro selling and risk off before the holiday."
Expectations that Brazil would continue to dedicate a growing share of its sugarcane to the production of ethanol, rather than sugar, helped support prices in recent weeks. The downturn in oil prices, however, is prompting concerns that ethanol economics are changing and could thus encourage a return to higher sugar production, dealers said.
Oil prices tumbled more than 7 percent, with US crude plunging to its lowest in over a year, caught in Wall Street's broader selloff fed by growing concerns about slowing global growth. March white sugar settled down $5.80, or 1.7 percent, at $338.10 per tonne after touching $337.30, a nearly seven-week low.
March New York cocoa settled down $16, or 0.7 percent, at $2,190 per tonne. Tuesday's settle was 9.4 percent below the 3-1/2 month peak of $2,410 reached on Nov 7. Prices had been buoyed in October by positive third-quarter grindings data, but such supportive demand signals are now being counterbalanced by signals of plentiful supplies. Port arrivals in top grower Ivory Coast through Nov. 18 were 48 percent higher than last year.
"We're treading water while we seek a convincing direction. I think it is going to be something non-cocoa related that will see us move," one London dealer said, noting potential further volatility in sterling as Britain prepares to leave the European Union. March London cocoa settled down 16 pounds, or 1 percent, at 1,621 pounds per tonne.
March arabica coffee settled down 1.75 cents, or 1.5 percent, at $1.149 per lb, pressured by broader equity market weakness. January robusta coffee settled down $7, or 0.4 percent, at $1,625 per tonne. Louis Dreyfus Company is poised to regain majority ownership of robusta coffee stocks on ICE Futures Europe, four trade sources told Reuters, in a move that will give the firm a strategic edge in trading the London-based futures market.
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