Cocoa dropped to its lowest in more than two years on Thursday on good West African crop prospects, while coffee and raw sugar were mixed as the commodity complex reversed higher. US stocks, crude oil and the euro gained as concerns the eurozone might break up eased and an Italian debt auction went better than many investors had expected, albeit at a high cost.
"Right now the (Ivorian) harvest looks good. They've had a second year of pretty decent weather," said Erica Rannestad, commodity analyst with CPM Group in New York. ICE March cocoa dropped $44 or 1.7 percent, to finish at $2,559 per tonne, after falling to the lowest since July 2009 at $2,548. Benchmark Liffe March cocoa futures settled down 28 pounds, or 1.7 percent, at 1,605 pounds a tonne, after falling to 1,603 pounds, also the lowest for the second position since July 2009. "Cocoa prices slumped ... pressured by increased flow of main crop cocoa out of West Africa combined with broad-based weakness in commodity markets," Barclays Capital said in a daily commodities note. Coffee prices were mixed and little changed after the Reuters-Jefferies CRB index, a global benchmark for commodities, reversed slightly higher.
"People will stay glued to the macro developments in the eurozone and will be reluctant to trade actively until they know more about what's going to happen," said analyst Andrey Kryuchenkov of VTB Capital. ICE December arabica coffee crept down 0.20 cent to close at $2.30 per lb, while Liffe January robustas closed up $1 at $1,837 a tonne. "People are on the sidelines in the market," said one ICE floor dealer. The International Coffee Organisation said early in the day that world 2011/12 global coffee output is expected at 127.4 million 60-kg bags, down from the previous estimate of around 130 million bags, yet the market failed to respond, the dealer said.
ICE certified arabica stocks rose by a steep 15,684 bags to 1,316,490 bags by November 9, with a heavy 273,610 bags pending grading. ICE March raw sugar futures inched up 0.03 cent to finish at 25.39 cents a lb. Prices below 25 cents are expected to stimulate demand on the physical market, dealers said. Liffe December white sugar closed down $2.70 at $674.80 per tonne.
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