ICE arabica coffee dropped the most in over two weeks on Monday, as the flagging Brazilian real pushed again toward historic lows and a commodity investor selling-spree continued. Front-month raw sugar on ICE Futures US touched a two-month high ahead of the contract's expiry, while cocoa fell. Concerns over economic growth in China, the top consumer of many raw materials, weighed on stocks and commodities after disappointing data.
The bellwether Thomson Reuters CoreCommodity CRB Index was down over 1 percent. ICE December arabica coffee finished down 3.55 cents, or 2.9 percent, at $1.1915 per lb. November robusta coffee on ICE closed down $48, or 3 percent, at $1,548 a tonne.
"All of the markets are tanking, the bear camp is winning today," said Nick Gentile, managing partner of commodity trading advisor NickJen Capital in New York, noting excess supplies and weak prices across the sector. "Plus, the real's down, so that's hurting coffee and sugar."
Brazil is the world's top producer of arabica coffee and sugar. The real's devaluation against the US dollar encourages selling of the greenback-traded commodities, making them more valuable in local currency terms. Adding pressure to coffee prices were rains in some areas of Brazil, expected to be beneficial during the crop's flowering stage, even as they raised expectations that cane mills would again slow down sugar output.
ICE October raw sugar finished up 0.01 cent, or 0.09 percent, to 11.75 cents per pound after touching a two-month high of 11.86 cents in choppy, heavy trading. Prices largely withstood pressure from a broader sell-off and weak real on strength seen in prices further along the forward curve, amid forecasts of a supply deficit to emerge in the crop year beginning October 1 and unfavourable dry weather in India.
"The global deficit for the 2015/16 season that has already been predicted for months now appears increasingly realistic," Commerzbank said in a daily report. A large delivery of mostly Brazilian sugar was expected against October contract expiry on Wednesday. The most-active March contract eased 0.03 cent, or 0.2 percent, to end at 12.38 cents per lb.
ICE December white sugar closed down 20 cents, or 0.06 percent, at $359.80 per tonne. London December cocoa ended down 30 pounds, or 1.3 percent, at 2,210 pounds, down from Friday's 4-1/2-year peak of 2,256 pounds. New York December cocoa settled down $34, or 1 percent, at $3,242 per tonne.
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