ICE arabica coffee futures touched an almost three-year low on Monday during a broader selloff in commodities amid mounting concern about the pace of the global economic recovery and weaker-than expected economic data from China. Raw sugar and cocoa futures on ICE also fell.
The Thomson Reuters-Jefferies CRB Index sank, with gold posting its largest two-day loss in 30 years, as news of weaker-than-forecast economic data in China exacerbated earlier losses prompted by the central bank of Cyprus planning to sell gold. Soft commodities felt pressure as funds accelerated their exits from the market, and investors also cut exposure to oil, copper and grain.
ICE July arabica coffee futures fell 1.05 cents, or 0.8 percent, to finish at $1.3610 per lb, after earlier sliding to $1.3355 a lb, the lowest price for the second-month contract since May 2010. "Coffee over the last several months has been traded more by specs than commercial interests, and now we have a meltdown in the outside markets," said James Cordier, principal and founder of Optionsellers.com.
Trading volumes were heavy, at about 59,000 contracts compared with a 30-day average of fewer than 23,000 contracts, preliminary Thomson Reuters data showed. July robusta coffee on Liffe closed down $11, or 0.5 percent, at $2,058 a tonne. Raw sugar futures on ICE also were hit by the overall selling, posting their steepest one-day loss since mid-March. May raw sugar futures dropped 0.24 cent, or 1.3 percent, to settle at 17.79 cents a lb. The front-month contract has been inching up from a more than 2-1/2-year low of 17.47 cents touched on April 3 on expectations of steep global output.
The July contract on ICE closed down 0.29 cent, or 1.6 percent, at 17.55 cents a lb. The day's losses were seen limited by concerns over near-term supplies from Brazil, the world's top producer. Delays to the early phase of centre-south Brazil's harvest due to rain pushed the front-month contract to a premium of 0.24 cent over July on Monday, the highest level since February.
Trading volumes were heavy, at about 175,000 contracts compared with a 30-day average of fewer than 89,000 lots, according to preliminary Thomson Reuters data. The expiry of the ICE May raw sugar futures contract will be on April 30. Speculators increased their bearish stance in raw sugar contracts on ICE Futures US, boosting it to a record in the week ended April 9, US Commodity Futures Trading Commission (CFTC) data showed on Friday.
Their large bearish stance has left the ICE sugar market prone to short-covering rallies, dealers said. May white sugar on Liffe was down $2.50, or 0.5 percent, at $519.7 a tonne. July cocoa on ICE edged down $1, or 0.04 percent, to finish at $2,267 a tonne. The contract's technical outlook became more bullish after prices surpassed resistance at $2,200 per tonne last week, dealers said.
Dealers awaited European first-quarter cocoa grind data, a measure of demand, on April 17. Liffe July cocoa futures inched up 1 pound, or 0.07 percent, to finish at 1,505 pounds a tonne. The contract reached 1,512 pounds per tonne on Friday, its highest level since December 2012.
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