Sugar and coffee down

Sugar and coffee futures crumbled on Tuesday pressured by the robust dollar and lower financial markets, with the prospect of ample sugar supplies from the upcoming cane harvest in Brazil's prime center-south region adding to the bearish mood in sugar. Cocoa ended flat to firmer, underpinned by tight supplies in the period between West Africa's main and mid crops.
Global stock markets and the euro fell on Tuesday due to worries about a global growth slowdown and whether enough private investors would participate in a Greek debt restructure to prevent a disorderly default. "The dollar's up and the outside markets are weaker. Equities are down and that's not a very helpful backdrop for commodities, so I think prices are down on the back of that," said James Kirkup, head of sugar brokerage at ABN Amro Markets.
The key May raw sugar on ICE dropped 0.63 cent to settle at 24.05 cents a lb. London May white sugar futures dropped $16.10 or nearly 2.5 percent to close at $631.40 per tonne. "It's hard to be bullish at the moment it seems, and the vulnerability is probably from present levels down to 23.50 cents a lb (where there are probably fund sell stops)," said Thomas Kujawa of broker Sucden Financial.
Sugar futures could be exposed to further downside pressure because of a large increase in the speculative long position, based on the latest Commitment of Traders report that showed positions up to last Tuesday's close. News that Brazil's sugar harvest faces a late start limited the downside pressure on prices, but dealers said that if the cane stays in the fields longer, sucrose content will build, which could augur for more sugar in the pipeline.
Last week, Brazilian industry group Unica said the 2012/13 centre-south cane crushing season will start almost two weeks later than average. Dealers also tracked news from No 2 producer India, looking for signals the country could soon authorise more exports. Coffee futures matched the weakness seen in sugar, while cocoa stabilised. Benchmark Liffe May robusta coffee futures tumbled $48 or 2.4 percent to close at $1,955 a tonne, pressured by the weaker financial markets and strengthening dollar. The May arabica coffee contract ended down 8.65 cents or 4.3 percent at $1.9305 a lb. "This macroeconomic sentiment is having a negative effect on coffee," a senior London-based coffee futures dealer said.
The market digested news that Vietnam's coffee exports this month could ease to between 120,000 and 130,000 tonnes, or 2 million to 2.2 million bags, after an estimated 180,000 tonnes shipped in February, traders said on Tuesday. "This news gives a little bit of support to the market," the robusta futures dealer said. Cocoa stabilised with US bean futures holding their own after sinking previously to a three-week low.
ICE May cocoa ended flat at $2,283 per tonne. London's May cocoa futures added 10 pounds to finish at 1,476 pounds per tonne. Cocoa arrivals at ports in top grower Ivory Coast were 1.5 percent lower at around 1,005,000 tonnes by March 4, compared with 1,020,489 tonnes in the same period of the previous season, exporters estimated on Monday.