Raw sugar hits seven-year low, cocoa rises

Raw sugar futures slumped to a seven-year low and arabica coffee slid 4 percent to its weakest level in more than 1-1/2 years on Monday, as concern about a China-led economic slowdown prompted broad-based losses in commodity markets. Cocoa futures initially fell around 3 percent, but commercial and trade buying at the lows pushed prices higher, bucking the session's weak trend.
"Today's a macro meltdown due to equities that's spilling over to commodities," said Nick Gentile, managing partner of commodity trading advisor NickJen Capital in New York. "It's all computers fighting today." The 19-commodity Thomson Reuters CoreCommodity Index fell as much as 3.2 percent to the lowest level since December 2002 after Chinese equities resumed their slide from last week, fuelling worries of a hard landing in the world's biggest consumer of raw materials.
"Today has been a bad day for markets across the board with the news coming out of China and the fear gripping equity markets," Capital Economics analyst Hamish Smith said. Sugar and coffee also were pressured by the weakness of Brazil's real, making prices more attractive in local-currency terms for producers in the world's top grower, dealers said. Brazil's currency fell to its weakest level against the dollar in more than 12 years.
October raw sugar on ICE settled down just 0.5 percent at 10.39 cents per lb, after falling 3 percent to a seven-year low at 10.13 cents. Morgan Stanley said in a market note that sugar should derive support from several factors including a shift in the use of cane in Brazil towards ethanol production.
White sugar futures fell less sharply, with October closing down 10 cents, or 0.03 percent, at $333.60 per tonne, holding just above last week's 6-1/2-year low of $329.00. Its premium over raw sugar resumed its rise for the second straight day, after falling sharply from the two-year peak reached on August 11. December arabica finished down 4.75 cents, or 3.8 percent, at $1.217 per lb after slipping to a low of $1.21, the weakest level for the second month since January 2014.
November robusta coffee ended down $15, or 0.9 percent, at $1,627 a tonne after hitting a three-month low for the second month of $1,610. Cocoa futures turned higher, with New York December settling up $14, or 0.5 percent at $3,088 a tonne, after falling to $2,989. December London cocoa closed up 5 pounds, or 0.2 percent, at 2,054 pounds a tonne, after dropping to 1,987 pounds.