Arabica prices fall sharply, sugar hovers above 2010 low

Arabica coffee futures on ICE fell 4 percent on Monday, heading down toward a 13-month low on a fresh wave of largely speculative selling as the Brazilian currency continued to weaken. Raw sugar also dropped, nearing the lowest level since 2010, while cocoa futures extended losses in thin trading.
Data on Friday showed the recent fall in arabica coffee futures was fuelled by speculative selling, as noncommercials turned net short in the week ended March 3 for the first time in 13 months. May arabica coffee on ICE settled down 2.9 cents, or 2.1 percent, at $1.37 per lb, after falling 4.1 percent to $1.3415, holding above last week's 13-month low of $1.2880 per lb.
The weak real, the currency in Brazil, which is the world's biggest coffee and sugar producer, attracted selling to a market that remained technically weak, while rain in the growing regions there also added pressure, traders said. However, Rabobank said that while rains provided some relief, the country could not harvest a bumper coffee crop in 2015/16 because drought had affected tree growth.
"Visitors to the area are reporting a better-than-expected crop in South of Minas and an expected but limited recovery in Zona da Mata and Parana," Rabobank said in a market note. May robusta coffee futures on ICE closed down $10, or 0.5 percent, at $1,871 a tonne. Raw sugar futures on ICE were also lower, with May settling down 0.17 cents, or 1.3 percent, at 13.27 cents a lb, hovering just above last week's low of 13.18 cents, its weakest since May 2010.
"Funds seem to be leaving commodities overall and moving into other areas, such as equities," said James Kirkup, head of sugar at ABN Amro Markets in London. May white sugar futures fell $3.40, or 0.9 percent, to end at $370.80 a tonne. May New York cocoa on ICE closed down $11, or 0.4 percent, at $2,934, falling for a fourth session after a recent rally ran out of momentum. May London cocoa eased by 11 pounds, or 0.5 percent, to close at 2,018 pounds a tonne, a second session of declines after a six-day surge.