Cocoa and sugar down

Cocoa futures fell on Wednesday in a technically driven correction following rallies in the previous two sessions, while arabica coffee and sugar extended losses, pressured by a weakening euro and share prices. The euro sank and stock markets fell on Wednesday, worried by record high borrowing costs for Italy and the Federal Reserve's decision to do nothing new to prop up growth despite warning Europe's debt crisis could hurt the US economy.
Cocoa futures fell after a surge on Tuesday, which one analyst said was overdone. The bounce had been sparked on Monday partly by a forecast from leading cocoa trader Olam International Ltd, which warned of a tightening global market in 2012, with supplies moving into deficit after this year's record surplus drove prices too low.
"I think the Olam-inspired rally has fizzled out already, and people are reassessing what is the truth of the supply and demand situation," said Gary Mead, an analyst with VM Group. March cocoa on ICE reversed early gains and was down $69 or 3.10 percent at $2,174 a tonne at 1530 GMT. The contract rallied sharply on Monday and Tuesday after sliding to a three-year low for the second month contract of $1,983 on Monday.
March cocoa on Liffe fell 43 pounds or 2.9 percent to 1,430 pounds a tonne in volume of 9,498 lots. ICE raw sugar extended losses on producer and investor selling, weighed by big harvests in the EU, Russia, Ukraine, India and Thailand. "Background reports of big harvests in Europe and Russia and the onset of the Thai harvest should keep values under pressure for the foreseeable future," said Nick Penney of brokerage Sucden Financial.
"The speculative community is sitting tight awaiting developments in the macroeconomic area, where doubts persist on the ability of politicians and central bankers to finally sort out the euro debt problems."
Benchmark March futures added to losses to trade down 0.45 cent or 1.9 percent to 22.99 cents a lb on producer and investor selling, pressured by outside financial markets. "We seem to have a general weakness across the whole commodity complex and indeed the equity markets, and sugar is down in line with other markets," said James Kirkup, head of sugar brokerage at ABN Amro Markets (UK) Ltd.
Sugar prices appear unlikely to rise significantly without a pick-up in physical offtake. March white sugar futures on Liffe fell $10.0 or 1.6 percent to $598.60 per tonne in moderate volume of 5,527 lots. March arabica coffee on ICE was down 4.5 cents or 2 percent at $2.1845 a lb. March robusta coffee on Liffe was off $34 or 1.75 percent at $1,905 a tonne in modest turnover of 3,119 lots.