Raw sugar, arabica coffee down

Raw sugar on ICE hit a 2-1/2-month low on Friday on producer and fund selling as the currency in top grower Brazil fell, while arabica coffee dropped to multi-month lows. Cocoa corrected higher after the prior session's biggest fall in two months, while the London market's December/March spread narrowed sharply for the second straight session as the spot contract expired.
Raw sugar fell as oil tumbled below $58 a barrel on a supply glut while the weak Brazilian currency attracted producer and fund selling, traders said. Cheap crude oil makes cane-derived ethanol biofuel less competitive. March raw sugar closed down 0.17 cent, or 1.1 percent, at 14.98 cents a lb, after touching a contract low at 14.96 cents, the lowest on a spot continuation chart since September 26.
March white sugar ended down $2.90, or 0.7 percent, at $390.40, having touched a contract low of $390.20. Traders also mentioned expectations that India could move soon to launch raw sugar export incentives to help mills reduce substantial inventories. "You could see potentially more Indian exports hit the market," said Michael McDougall, a senior vice president for brokerage Newedge USA in New York. Coffee futures dropped as the weather premium for arabica continued to be wiped out on forecasts for rain over coffee farms in top grower Brazil's southern Minas Gerais and north-western Sao Paulo.
"The outlook for weather in Brazil is the main driver of the arabica coffee market," said Stefan Uhlenbrock, a senior soft commodities analyst with F.O. Licht, referring to steady rains in Brazil's coffee growing areas. March arabica coffee settled down 2.40 cents, or 1.4 percent, at $1.74 per lb, having touched $1.7355 per lb, the lowest since July 23. March robusta coffee rose $9, or 0.5 percent, to settle at $1,974 a tonne.
Cocoa futures consolidated higher. London March cocoa settled up 8 pounds, or 0.3 percent, at 1,888 pounds a tonne, while the December/March last traded at 30 pounds after trading as narrow a 9 pounds, well below a 60-pound close on Wednesday. The December delivery could be the largest in a year. New York March cocoa closed up $3, or 0.1 percent, at $2,857 a tonne.