Robusta coffee and white sugar ended lower on Tuesday, giving up early gains as oil reversed trend, but fund buying and weaker sterling pushed up cocoa. Benchmark July coffee closed $10 a tonne lower at $2,232 after trading as high as $2,274 in volume of 7,238 lots - off a one-month high of $2,334 a tonne hit last week.
"People are holding off towards the top of the range above $2,400 for July. Markets are very quiet anyway, that's why they are coming off," said a dealer in London. "We are in the middle of the range, which is why people are less confident whether we are going to push up. Around $2,200 is the bottom line," he said.
Origin sales from Indonesia and Vietnam were also putting pressure on the market. Vietnam's coffee sales slowed in the past week despite exporters cutting their offer prices as buyers switched to Indonesian beans. The July arabica contract fell 0.15 to $1.3385 per lb.
Oil dropped below $130 a barrel after a stronger US dollar helped to pull prices down from peaks hit when rebels attacked Nigerian oil facilities. London white sugar futures were also down after early buying subsided, with dealers expecting prices to fall further against a backdrop of a massive global surplus.
August rose to $332.4 a tonne, tracking firm oil before settling at $323.80 a tonne, down $1.40 in a volume of 2,581 lots. Thai sugar exports are likely to hit a 5-year high of more than 5 million tonnes in 2008 after good rains yielded a bumper cane crop.
Cuba's sugar minister said Monday the harvest was all but over with output more than 20 percent above last year's 1.2 million tonnes of raw sugar. "We should be looking at negative growth in sugar there, but it doesn't seem doing that actually. But I would say people have been on the sidelines," said another London dealer.
"I guess, we will be trading in range of $320 to $335 this week. It's quite tight." Cocoa futures defied the downtrend and sustain early gains as the market slowly began to regain ground after recent weakness. September settled 22 pounds a tonne higher at 1,392 pounds, having earlier hit a high of 1,406 pounds - its highest since May 20.
The contract fell more than 100 pounds from a high on May 13 of 1,470 pounds to a low of 1,366 pounds on May 22 but managed to consolidate just above the lows late last week.
"It does take some strength from oil and obviously the New York market. A slight change in sterling also helps," said the first London dealer. He pegged resistance at 1,450 pounds. The dollar rose against sterling, pushing the British currency down nearly 0.4 percent to $1.9750. Indonesia's cocoa bean exports are likely to fall by 3 percent this year from a year ago as a plant disease may cut back output, a senior industry official said on Tuesday.
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