Raw sugar on ICE dropped to a 2-1/2-month low on Tuesday, falling for a fourth straight session on pressure from the oil price slump, while arabica coffee fell as Brazil's weak currency attracted investor liquidation and producer selling. Cocoa prices rose, buoyed by a drop in bean deliveries to ports in top producer Ivory Coast.
March raw sugar settled down 0.25 cent, or 1.7 percent, at 14.71 cents a lb, after touching 14.67 cents, the lowest since September 25. March white sugar closed down $5, or 1.3 percent, at $383.70 per tonne, having touched a contract low of $383.50. "If oil prices stay low over a long period, we will see an influence on ethanol production," said Michaela Kuhl, soft commodities analyst at Commerzbank. Cheap oil makes cane-derived ethanol biofuel less competitive. US crude oil futures bounced up off a 5-1/2-year low on Tuesday, hovering around $55 a barrel in volatile trading near that price. "Overall the market suits the bears for the medium term and being long the market seems only for the 'brave'," said Thomas Kujawa, co-head of the softs desk at Sucden Financial Sugar.
Continued weakness in the real, the currency in top coffee and sugar producer Brazil, attracted selling by investors and producers, traders said. "The real getting weaker is leading the market. Overall you have more liquidation in commodities," said Rodrigo Costa, director of coffee for Newedge USA in New York. March arabica fell 0.95 cent, or 0.5 percent, to end at $1.7770 per lb. March robusta coffee fell $1, or 0.1 percent, to close at $1,964 a tonne.
Cocoa futures rose for the third straight session, supported by a year-over-year fall in bean arrivals in Ivory Coast. London March cocoa settled up 21 pounds, or 1.1 percent, at 1,928 pounds a tonne, rising above the 200-day moving average at 1,912. New York March futures closed up $41, or 1.4 percent, at $2,914 a tonne.
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