London sugar futures fell over two percent on fund sales on Monday after the WTO ordered the EU to limit sugar exports earlier than expected, triggering sell stops, traders said. "It is fund and trade selling," one European futures trader said.
Other traders referred to fund and speculator selling in heavy volumes. Liffe December white sugar futures dropped 2.89 percent or $8.30 to a session low of $279.20 per tonne before edging up to stand at $280.00, down $7.50, or 2.61 percent, in volume of 5,776 lots at 1608 GMT.
Traders said the sell-off was a continuation of Friday's three percent drop after the WTO ordered the European Union to limit sugar exports by May 22, 2006, a date at least five weeks earlier than expected by the market.
They said the WTO decision could mean that the EU would have to sell some four million tonnes of "C" sugar by that date.
Australia, Brazil and Thailand asked a WTO panel to decide when the EU would have to implement the WTO's original ruling, issued in 2004.
The EU later lost an appeal against that decision, and must now bring its sugar policy into line - or risk trade sanctions.
Traded volume in Liffe white sugar futures hit an all-time daily volume record high of 19,667 contracts on Friday, breaking the previous record of 19,045 contracts, Euronext. Liffe said in a statement on Monday.
COFFEE 3-WEEK LOW London robusta coffee drifted down on Monday, extending a three-week low, but contract rolling out of front-month November was the session's main feature, traders said on Monday.
First tender day for Liffe's November is Tuesday. The contract moved 10,026 lots and was $8 weaker by 1305 GMT at $918 a tonne. It moved in a $913-927 range.
Second-month January shifted 9,268 lots and was also $8 down at $938 after a $930-946 range.
The expected start of the Vietnamese season has been weighing on robusta recently and losses on Friday has left the market looking weak technically, traders and analysts said.
"We broke support at $950 and people are waiting to see if there are more losses in New York," CoffeeNetwork analyst Andrea Thompson said, noting a gap between $929 and $935 that the market was trying to fill. That's the difference between the session high of October 10 and the low of October 11.
She said there was little immediate cause for concern about a typhoon heading towards Vietnam or Hurricane Beta in Nicaragua although coffee players will be waiting to see if heavy rains damage Nicaraguan crops.
The powerful typhoon churning through the South China Sea is expected to hit central Vietnam this week but is not expected to affect key coffee and growing regions, which lie further to the south.