Liffe May white sugar falls $7.60 to close at $720.00 a tonne on Friday. Prices slide along with other commodity markets after a huge earthquake and tsunami struck Japan. Liffe May robusta coffee ends down $87 at $2,421 a tonne, also caught up in the sell-off in commodities. Downward correction also seen overdue following recent strong advance.
Liffe May cocoa ends down 16 pounds at 2,226 pounds a tonne. Market weighed by broad-based setback in commodity markets but the conflict in Ivory Coast limits losses.
Japan's massive earthquake slammed risk assets across the world as concerns mounted about the still unknown damage to the world's third-largest economy from the devastating tsunami spawned. Oil prices fell, shutting refineries and other industrial facilities.
"I think we're getting some further long liquidation ahead of weekend and further general nervousness about the earthquake pressuring softs," said Sterling Smith, an analyst with Country Hedging in Minnesota. Coffee extended Thursday's steep losses, pushing arabicas even further below Wednesday's 34-year peak at $2.9665 per lb, basis May, as dealers grabbed profits.
"We're seeing some follow-through selling from yesterday's rout, and the softs are playing along with the general commodity liquidation," Smith said, adding Thursday's drop "rattled a lot of longs and people are cutting back on risk."
A lack of roaster buying also allowed the move lower to happen easily, while the tight supplies that caused the sustained rally remained.
A potentially devastating storm is brewing in the world's physical coffee market, where a double whammy is hitting the companies that get beans from the farm gate to the cafe table. Sugar had been trading above 30 cents a lb and the prospect that India could actually export 500,000 tonnes of sugar or more knocked the bullish legs out of the market.
Referring to concerns over global economic growth after a surge in commodity prices, Leonardo Bichara Rocha, a senior economist with the International Sugar Organisation, said: "A price correction (in commodities) could be on the cards."
Unrest in top producer Ivory Coast prevented deeper losses. Senegal's leader, Abdoulaye Wade, said top grower Ivory Coast was "entering a phase of war" after the latest attempt by the African Union to resolve a power struggle by diplomacy failed.
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