London sugar futures closed lower after nudging a seven-year front-month continuation high of $297.20 per tonne, and traders said they had potential to hit $300 due to a supply squeeze. Front month August closed down $7 at $280.3 a tonne in volume of 4,541 lots, after trading between $280 and $297.2.
October concluded down $5.1 at $265.8 a tonne in volume of 3,314 lots, having moved between $264.7 and $274.7.
"Does the market have the potential to break through $300? Yes," one trader said. "Will it? I don't know."
A Reuters news report of a purchase by Sudan of 70,000 tonnes of high-quality sugar from the Dubai refinery, helped push Liffe August futures to its front-month seven-year continuation high, but the market then eased back, traders said.
Sugar traders were taken by surprise by the announcement of a European Commission plan last week to hold over sugar intervention stocks into next year, squeezing short-term availability of refined sugar, dealers said.
Traders said Brazil, the world's biggest sugar producer, was likely to be the main beneficiary from news that Pakistan has decided to allow unlimited imports of raw sugar and has dropped a quota system in an effort to rein in rising domestic prices.
COCOA DOWN: London cocoa futures fell on Tuesday, touching a fresh two-week low as they tracked currency-led weakness on the New York market, traders said.
Liffe's benchmark September cocoa futures lost 19 pounds, or 2.2 percent, to 863 pounds a tonne. The day's low was 862 - the contract's weakest price since June 14. Volume was 3,401 lots.
Spot month July moved 4,204 lots, mainly on trade Against Actuals. It closed down 19 pounds at 853 pounds a tonne.
Total volume reached 9,195 lots.
"The dollar is stronger and that has pushed New York down quite significantly. London is sympathetic," one dealer said.
He noticed a focus on September-December trading.
Prices are down from a peak of 911 touched last week after a short covering rally petered out but still above a previous 800-850 second-month trading range. Dealers said the market is unlikely to erode much further because of concerns about unrest in top cocoa grower Ivory Coast.
COFFEE JUMPS: London robusta coffee futures jumped over three percent on Tuesday, helped by a corrective bounce back from recent negative sentiment, and boosted by Vietnamese supply fears.
London's benchmark September contract gained $47 to close at $1,238 a tonne, the top of its $1,180-1,238 range. Turnover was 6,829 out of a total of 17,269.
Coffee players had awaited direction from the US after investor selling in the New York arabica futures market pushed robusta off a 5-1/2 year high earlier this month.
"It's a corrective bounce. It's fallen in the last few sessions but not to any large extent....There's a lot of uncertainty over Vietnamese crops right now," Coffee Network analyst Andrea Thompson said.
The New York Board of Trade's bellwether September contract was up 1.3 cents at $1.0710 a lb soon after London's close.
Other London contracts also traded several thousand lots on Tuesday. Spot July moved 5,539 lots and closed at $1,204 a tonne, up $47. November turned over 3,941 lots and finished $48 stronger at $1,257.
Markets were also waiting for more news on drought damage to crops from Vietnam, the world's second largest coffee producer.
Coffee trade has slowed in Vietnam in the past week as growers are reluctant to lower their prices even though London futures have eased, traders said on Tuesday.