London sugar down

White sugar futures finished lower on Friday as abundant supplies and sluggish demand outweighed the supportive impact of rising crude oil prices and a weak dollar, dealers said.
Robusta coffee ended slightly higher in a modest rebound from Thursday's steep decline while cocoa ended slightly lower on arbitrage selling linked to the weak dollar."Sugar looks set to weaken further because of the big glut and weak consumer demand," one trader said.
Benchmark August white sugar ended down $2.50 at $325.20 a tonne. Dealers noted the contract had fallen by $8.00 during a week in which crude oil prices soared to record highs, indicating a breakdown in the relationship between the two markets.
Analysts have attempted to link the two commodities because of the use of sugarcane in important producing countries, such as Brazil, to manufacture fuel ethanol. Dealers said New York raw was leading the decline in sugar prices, depressed by concern there could be heavy deliveries against the July contract. July New York briefly dipped below 10.00 cents a lb on Friday for the first time since early November 2007.
Dealers said news that consultancy Kingsman SA had raised its estimate of the 2007/08 global sugar surplus to 11.34 million tonnes reinforced concern about the supply glut.
Robusta coffee futures ended higher as the market staged a modest recovery after Thursday's steep decline. Benchmark July ended up $13 at $2,242 a tonne. The contract tumbled $82 on Thursday on fund selling linked to a firmer dollar.
"It is just a little bit of profit-taking from the shorts," one dealer said. Dealers said the market remains rangebound. The July contract has been stuck in a $2,100 to $2,400 range since mid-March.
"I think the most likely news that could change that would be weather, particularly in Brazil," one dealer said, adding he expected the market to keep holding in a narrow band in the near future. Dealers said the upside was limited by the flow of supplies from Indonesia and good crop progress for robusta crops in both Vietnam and Brazil.
"Everything in Indonesia is looking fine. The harvest is proceeding well and in Brazil the conillons are also doing well," one dealer said. Europe's physical coffee market saw some buying interest in robustas from Africa and Indonesia this week, traders said on Friday.
But high differentials kept interest in Brazilian arabicas and Vietnamese robustas, the main supplies of coffee, at relatively low levels. Cocoa futures ended lower with the market continuing its gradual decline with some arguing prices remained overvalued based on market fundamentals. Fund buying sparked a sharp rise in prices earlier this year.
"Buyers are just sitting on the sidelines and hoping that funds will move out of cocoa into oil or other commodities," one European physical cocoa trader said. "This could conceivably bring the fall of around 60 pounds in London that buyers need," the trader added. September cocoa ended down 10 pounds at 1,370 pounds a tonne. The contract has fallen 100 pounds during the last 10 days after touching 1,470 pounds on May 13.