Coffee, sugar and cocoa futures erased gains as the US dollar trimmed losses after data showing a smaller-than-expected contraction in the US economy in the third quarter.
Still, the fall in US gross domestic product in the last quarter was the sharpest contraction in seven years, underscoring fears in soft commodity markets, which have sunk to multi-month lows, that a global recession is on the cards. A cocoa futures trader said, "It seems to be all currency- related trading in terms of what's driving the market."
Soft commodities mirrored other commodities when they swung into negative territory after release of the US GDP data. Gold and oil fell, giving up gains, as the dollar trimmed losses against the euro and recession threats offset a brief outbreak of optimism about the global economy fuelled by a half-point US interest rate cut on Wednesday.
January robustas wiped out the morning's gains as investment fund selling accelerated, and were down $38 or 2.3 percent to $1,604 per tonne in moderate volume of 6,097 lots at 1532 GMT. ICE December arabicas also reversed direction, standing at $1.1060 cents a lb, down 1.60 cents or 1.4 percent.
World stocks and the euro rallied on Thursday, driven by bargain-hunting and sweeping gains in emerging markets after the US Federal Reserve cut interest rates and opened swap lines to four developing economies. Kraft Foods Inc will lower prices in some categories as commodity costs fall, but many costs still remain above year-ago levels, the company's chief executive said on Wednesday.
Sugar futures also turned negative later in the session, having earlier risen on investor buying into producer selling on firmer oil prices and a weaker dollar after the US rate cut. ICE March raw sugar was down 0.26 cent, or 2.15 percent, to 11.83 cents per lb at 1534 GMT, having earlier in the session touched a three-week peak, basis front month, of 12.35 cents a lb.
London December white sugar futures were down $2.0, or 0.6 percent, to $328.0 per tonne in slim turnover of 1,396 lots. The sugar crushing season in Thailand, Asia's top producer, may be delayed by as much as one month due to a fall in world sugar prices, traders and industry officials said on Thursday.
Benchmark ICE December cocoa futures ran into negative territory and were down $52 or 2.4 percent to $2,085 per tonne at 1609 GMT. London March cocoa, wiping out earlier gains, were down 6 pounds or 0.44 percent to 1,350 pounds per tonne in slender turnover of 2,807 lots.
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