Liffe sugar falls

Sugar futures extended losses and dropped to a two-week low on Tuesday, weighed by weaker global growth prospects that helped send world stocks to a one-month low. The Reuters-Jefferies CRB index was quietly lower as investors showed concern about a possible US credit downgrade and signs of a weak US economy.
"With the macro picture not helping, sugar is in correction mode," Nick Penney at brokerage Sucden said. "We expect liquidation of some of the fund long position soon in the absence of upward momentum." October white sugar on Liffe fell $19, or 2.5 percent, to $751 per tonne.
Dealers said there was still potential for Brazil's cane crop to be revised lower, noting the lowest predictions were for a cane crop below 500 million tonnes, but others noted that production was going well in other countries.
"The Brazil story needs to get progressively worse on a regular basis to keep the bulls interested and long," said Luis Rangel, vice-president of commodity derivatives with ICAP North America in New Jersey.
"The minute the music stops and the bull story stops coming out of Brazil, then the market doesn't have fresh demand to support it." Dealers said the market was weighed by sluggish physical demand and a firmer dollar. "Volume has been pretty small, we've been going up on speculator money coming in and no one selling, but now it seems to have turned," a London-based fund analyst said.
Spread volume has been heavier than normal ahead of the index fund roll that is expected to begin on Friday. September cocoa on Liffe eased 3 pounds to end at 1,854 pounds a tonne.
Although a large global cocoa surplus is widely expected in the 2010/11 crop year, dealers expect a 2011/12 deficit of around 100,000 tonnes due to less favourable weather in West Africa compared with the previous year. Dealers said diminished stocks in European warehouses following the export ban in top grower Ivory Coast earlier in the year were helping to prevent deeper losses.
"Tenderable availability in London is low," a London-based broker said. Arabica coffee futures were firm, in a technical bounce off good support at $2.40, basis September and underpinned by cold weather in Brazil. September robusta coffee on Liffe gained $11 to $2,113 per tonne.