New York cocoa futures dropped to a 5-1/2 month low on Monday, pressured by a strong crop in top-producer Ivory Coast, the possibility of further speculator selling, and a stronger dollar. Arabica coffee on ICE Futures US fell in choppy trade on forecasts for rain in top-grower Brazil, while raw sugar fell on a stronger US dollar and ample global supplies.
New York December cocoa fell $38, or 1.3 percent, to settle at $2,861 a tonne after dropping as low as $2,859 a tonne, its lowest level since May 12, 2014. Port arrivals in Ivory Coast, which produces 40 percent of the world's cocoa, rose in the first month of the season from last year, exporters said on Monday. In addition, forecasts for favourable weather were expected to boost the country's 2014/15 cocoa crop after a record 2013/14 season.
"Unless we have new news in regards to illness slowing down the cocoa infrastructure in West Africa there is no reason not to sell," said Hector Galvan, senior softs broker with RJO Futures in Chicago. Traders have now completely erased a so-called "Ebola premium" they had built into the market on fears the disease would spread to leading producers. A stronger dollar, which encourages producer selling by making dollar-traded commodities more expensive in local currency, also weighed, Galvan said.
Speculators in the week ended October 28 cut their net short in cocoa futures for the fourth straight week, the US Commodity Futures Trading Commission said Friday. The prospect of further fund selling contributed to cocoa's decline, said Nick Gentile, managing partner at NickJen Capital in New York.
London March cocoa futures settled down 22 pounds, or 1.2 percent, at 1,870 pounds a tonne. December arabica coffee fell 2.15 cents, or 1.1 percent, to settle at $1.8585 a lb. Two weeks of rain are expected for Brazil's center-south coffee region, local forecasters said Monday.
The market opened higher, as many traders are concerned that dry weather has already caused severe damage to Brazil's 2014/15 crop and that the upcoming rains are unlikely to help, but rain forecasts are still giving traders confidence to sell as they await further news of the Brazil crop's prospects. "The market is quick to take off the premium the moment it notices that there is not more momentum higher," Galvan said.
January robusta coffee gained $25, or 1.2 percent, settling at $2,073 a tonne. March ICE raw sugar futures dropped 0.11 cent, or 0.7 percent, to settle at 15.93 cents a lb, pressured by the stronger dollar and the prospect of new harvests in Asia. December white sugar settled up 30 cents, or 0.1 percent, at $422.70 a tonne.
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