ICE arabica coffee futures were down to a 4-1/2-year low on Wednesday, as abundant global supplies attracted follow-through selling and deterred buyers, while Liffe robusta turned higher after touching a three-year low for the third straight day.
ICE Futures US cocoa fell from Tuesday's two-year high as investors grabbed profits and the Liffe market also dipped. ICE raw sugar continued to consolidate lower, following last week's volatile rally and after Brazilian supplier Copersucar declared a widely expected force majeure.
Total volume was light in all softs markets. December arabica coffee futures on ICE closed down 1.40 cents, or 1.3 percent, at $1.1055 per lb, near the session low at $1.1050, the lowest for the spot contract since March 2009. "It's like a tire with a slow leak," said Sterling Smith, a futures specialist for Citigroup in Chicago, about arabica's long-term downtrend.
Investors continued to take on new short positions, dealers said, noting the market's rising open interest. On October 22, it rose by 1,584 lots to 160,516 lots, the highest since August 8, exchange data showed. Liffe January robusta coffee closed up $7, or 0.4 percent, at $1,586 a tonne, after earlier touching $1,572, the lowest level since September 2010.
The contract is technically oversold, at around 29 on the 14-day relative strength index, and turned higher after a lack of follow-through selling spurred short-covering, dealers said. The second position has dropped nearly 9 percent in the past week-and-a-half as traders focused on expectations for a record harvest in top robusta grower Vietnam.
Harvesting of Vietnam's crop is under way and is expected to be in full flow next month. ICE December cocoa fell $54, or 2 percent, to end at $2,714 a tonne, giving back all the gains made on Tuesday, when the spot contract reached a two-year peak at of $2,780. The previous session's rise took place as total open interest jumped by 1.3 percent to a record 226,213 contracts, exchange data showed, indicating new longs in the already bullish market.
A London-based cocoa futures broker said he believed selling by West African producers had weighed down the market. The market has rallied around 15 percent in the past 7 weeks, making it ripe for profit-taking this session, dealers said. London March cocoa settled down 28 pounds, or 1.6 percent, at 1,716 pounds per tonne. The move lower pushed the spot contracts on both the ICE and Liffe markets to shift to a discount against the second position. The ICE December/March spread moved to a $2 discount from Tuesday's $6 premium, while the Liffe spread moved to a discount intraday but later traded at a 6 pound premium from 26 pounds on Tuesday.
ICE March raw sugar futures finished down 0.17 cent, or 0.9 percent, at 19.28 cents per lb. The front month continued to consolidate in thin dealings after touching a one-year high of 20.16 cents on Friday following news of a fire at major warehouses in top grower Brazil. December white sugar on Liffe closed down $4.80, or 0.9 percent, at $509.00 a tonne.
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