Cocoa slumps on chart selling, raw sugar rises

Cocoa futures prices on ICE fell on Monday as technical weakness spurred fresh speculative selling, while raw sugar was lifted by a bout of buying after eight sessions of losses. The July New York cocoa contract fell $65, or 3.25 percent, to $1,936 a tonne by 1415 GMT after touching a session low of $1,927. July London cocoa fell 49 pounds, or 3.15 percent, to 1,505 pounds a tonne.
Dealers said the market was pressured by chart-based speculator selling, which dragged prices back down to recent support levels. The dip wiped out most of the gains made early last week, when news that Ivorian producers have sold forward a large chunk of the next crop triggered the biggest one-day surge since 2012. "We're now nearing the lows of last week," said one dealer. "The market as a whole appears to be in a bit of a trading range and it's likely to stay there until we get some strong, real fundamental input."
Speculators increased their net short position in London cocoa by 1,579 lots to 9,761 lots as of May 30, exchange data showed on Monday. July raw sugar rose 0.34 cents, or 2.47 percent, to 14.08 cents per lb, after shedding 8.7 percent over the course of last week. Dealers said the market was technically oversold, which triggered some corrective buying, although prices remained near the 15-month lows touched on Friday.
"We recognise that the market has dropped substantially and that indicators are oversold," said Nick Penney, senior trader at Sucden Financial. "It seems, however, that speculators are comfortable adding to shorts." Copersucar, the world's largest sugar cooperative, cut its estimate for Brazil's centre-south sugar output and lent some further support by suggesting that the world price slump in sugar could lead mills to favour ethanol.
August white sugar rose by $6.20, or 1.51 percent, to $416.50 a tonne, having dropped to its lowest since March 2016 by the end of last week. The United Arab Emirates and Saudi Arabia have stopped exports of white sugar to Qatar after the two states broke off relations with Doha, in the first sign of the diplomatic crisis hitting the food trade, market sources said on Monday. July arabica gained 1.85 cents, or 1.47 percent, to $1.274 per lb. July robusta rose $4, or 0.20 percent, to $2,006 a tonne.