Chart-based selling pushed raw sugar futures on ICE to the lowest in nearly five years on Monday, but the premium of the spot contract surged to the highest since November 2013 with expectations for a small March delivery. Arabica coffee futures dropped 3 percent to a one-year low, having wiped out the weather premium placed in the market a year ago when a drought hurt the crop in top grower Brazil. New York cocoa rose for the 14th straight day to a four-month high.
In sugar, earlier weakness of the Brazilian real attracted producer selling but technical selling also weighed on prices as the market dropped for the fourth straight session. ICE May raw sugar futures settled down 0.19 cent, or 1.3 percent, at 14.13 cents a lb, after tapping 14.10 cents, the weakest level for the second month since May 2010.
Despite the weakness in outright prices, the March/May spread rose as high as a 0.21-cent premium, the biggest since November 2013 ahead of the March contract's expiry on Friday. "The market is currently expecting that only around 300,000 to 700,000 (tonnes) will actually be shipped, but with the market trading below 15.10 (cents a lb), even that amount might be optimistic," said Michael McDougall, senior director of the Brazil desk at Societe Generale in New York.
May white sugar futures fell $3.30, or 0.9 percent, to close at $377.70 per tonne. Arabica coffee futures closed down for the fifth session out of the past six as the chart became increasingly bearish and attracted technical sellers, traders said. May arabica coffee fell 4.65 cents, or 3 percent, to finish at $1.4825 per lb after slumping to $1.479, the lowest since February 18.
Dealers said there was continued short selling on weak technicals as well as disappointment from Friday's Commitment of Traders report that showed speculators had not liquidated large amounts of long position in the week ending February 17, as was thought when the market fell around 11 cents. May robusta coffee fell $26, or 1.3 percent, to end at $1,948 a tonne.
Strong cocoa charts continued to attract technical buyers while the prospect of lower production in Ghana remained a bullish factor, traders said. May New York cocoa settled up $22, or 0.7 percent, at $3,001 a tonne while May London cocoa ended up 7 pounds, or 0.3 percent, to 2,022 pounds a tonne.
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