NEW YORK/LONDON: ICE arabica coffee futures plunged on Wednesday on technically-driven selling, erasing the previous day's gains and hurtling toward multi-year lows set last week under pressure from huge global supplies.
London white sugar tumbled to a more than three-year low on weak demand, and cocoa futures gained after a late-session rally. The Thomson Reuters/Core Commodity CRB index gained, and the US dollar fell against a basket of global currencies.
IntercontinentalExchange completed the acquisition of NYSE Euronext, a deal that leaves ICE in control of the Liffe derivatives market.
The most-active March arabica coffee contract on ICE Futures US finished down 2.85 cents, or 2.6 percent, at $1.0595 per lb, reversing earlier gains.
It fell as much as 3 percent during the day's selloff. Last week, the second-month touched a nearly five-year low of $1.0415 as huge global supplies and expectations of another bumper crop in top grower Brazil drove selling and kept buyers on the sidelines.
The spot December contract tumbled 2.75 cents, or 2.6 percent, to close at $1.0305 per lb after sinking more than 3 percent and nearing last week's seven-year low of $1.0095.
As prices climbed this week from last week's lows, an inability to surpass key resistance levels was seen as a technical failure and prompted another wave of selling on Wednesday.
"When we couldn't take out $1.10 again today, any buying ideas quickly evaporated," said Sterling Smith, a futures specialist with Citigroup in Chicago.
"We keep getting these short-lived rallies on short-covering, and as soon as that dries up, we fall back down. We look like we're headed back toward $1."
Dealers see risks that arabica futures may soon dip below that key psychological and technical level, pressured by expectations for a huge Brazilian crop next year.
January robusta coffee on Liffe finished the day down $30, or 2 percent, at $1,465 a tonne, hovering near last week's more than three-year low of $1,431.
LIFFE SUGAR SINKS
December white sugar on Liffe dropped $6.50, or 1.4 percent, to close at $457.50 a tonne, and set a more than three-year low of $457.30 under pressure from weak demand and excess supplies.
The white sugar premium slipped below $80 in the session, the level seen as adequate for refineries to make a profit.
"I think the demand for whites at present is just very weak," a London broker said. "You've got to ask whether at sub-$80, a refinery is actually going to be working. Can they pump it out and make money on that sort of price? I think we're getting to the level where you think maybe not."
The December contract is due to expire on Friday, and its growing discount against the second-month March contract was seen as evidence of weak demand for taking cash delivery against the contract.
ICE March raw sugar futures closed down 0.07 cent, or 0.4 percent, at 17.80 cents a lb and touched a six-week low of 17.79 cents. "It's a slow grind lower in the raws," the broker said. "The overall fundamental bearish tone remains."
Brazil cane mills' output beat industry expectations for rising production in the second half of October, Tuesday's industry data showed.
In New York, the March cocoa contract closed up $43, or 1.6 percent, at $2,665 a tonne, rallying as much as 2.7 percent in late-session trade and gaining momentum on technically-driven buying.
Stop-loss orders were behind the jerky market movement in recent sessions, which saw the second-month touch a six-week low on Tuesday, dealers said.
"It's all based on speculators defending their positions and industry buying on the dips," a European analyst said of the volatility. Speculators hold their largest bullish position in cocoa futures and options since at least 2006, according to exchange data, boosting their bet as expectations of another deficit year have grown.
Even so, harvest pressure has built as supplies come online in West Africa, the world's key growing region.
March cocoa futures on Liffe finished up 20 pounds, or 1.2 percent, at 1,708 pounds a tonne.
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