NEW YORK/LONDON: Raw sugar futures on ICE touched a three-month low and then turned barely higher on Thursday, its first firm settlement in 12 sessions after a wave of late-day buying hit the market, while coffee markets extended losses.
Cocoa futures on both ICE Futures U.S. and Liffe eased as dealers noted the market was underpinned by industry increasing their coverage on any price drops.
ICE March raw sugar futures settled up 0.01 cent, or 0.06 percent, at 16.69 cent a lb, having earlier hit 16.55 cents a lb, their lowest level since September. The contract has dropped around 6 percent in the past 2-1/2 weeks of 11 consecutive weak sessions. Expectations for a global oversupply has weighed on the market most of the year, with prices now down about 15 percent from end-2012.
"Speculators are getting out, there's a little bit of short covering by the commercial sector, that's why it's just a slow grind lower," said a London-based broker, referring to weakness felt during most of the session.
A weaker Brazilian currency is expected to drag on both sugar and coffee prices, as it helps shield farmers in the world's top producer of both commodities against the full negative effects of dollar-denominated futures price declines.
The Brazilian real has shed around 7 percent of its value in just over a month.
"It does dampen the incentive to reduce supply," analyst Tom Pugh of Capital Economics said.
March white sugar on Liffe closed down 10 cents, or 0.02 percent, at $449.90 per tonne, after touching a contract low at $446.20.
Meanwhile, the biggest bank yet has vacated most of its commodity business. Deutsche Bank said mounting regulatory pressure led to its decision to exit the once lucrative sector. Its commodity index fund business will not be affected.
COFFEE SLIPS FROM MULTI-WEEK HIGHS
ICE arabica March futures finished down 2.40 cents, or 2.2 percent, at $1.06 per lb, heading toward the five-year low of $1.0415 per lb hit in November on an over supplied market.
The market, which has been widely expected to return to recent lows due to ample supplies, became technically weak after climbing to a six-week high on Wednesday then turning around to close below the previous session low. Traders said this triggered follow-through selling.
Capital Economics' Pugh said that given government supports in growers including Brazil and Colombia, and the lack of alternative crops, the supply glut was likely to continue as production exceeds demand. He forecast average 2014 arabica prices at $1.00 per lb.
Liffe March robusta coffee ended down $13, or 0.8 percent, at $1,656 a tonne, extending losses after breaching its 100-day moving average to hit a two-month high on Wednesday but then falling back below the technical indicator and closing lower.
Cocoa futures fell for the third straight day but losses were modest. Some investors took profits on huge long positions and chocolate makers continued to buy when the price dips to replenish their cover that has run down to below-average levels, dealers said.
"There's good two-way activity at these levels; origin selling, and industry support below the market," a London-based broker said.
ICE March cocoa futures settled down $15, or 0.5 percent, at $2,754 a tonne, easing further from their more than two-year high of $2,844 hit on Monday.
March cocoa on Liffe closed down a slight 3 pounds, or 0.2 percent, at 1,733 pounds per tonne.
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