London white sugar futures fell to a 26-month low on Wednesday as talk circulated of plentiful Brazilian supplies available to deliver against October which expires on Friday, dealers said. Cocoa ended down but held key support around its recent six-month low while robusta coffee ended little changed after earlier setting a fresh two-month high.
"The expiration of October is making people very aware there is too much sugar around," one dealer said. Most talk has centred of deliveries of 200,000 to 300,000 tonnes of whites against the contract and there has even been some suggestions the total could be as high as 500,000 tonnes. The sugar is expected to be mostly Brazilian but some supplies from Thailand may also be delivered, dealers said.
October fell to $263.10 a tonne, a 26-month low for the front month, before ending $4.60 down at $264.00. Dealers said weak demand linked to high freight rates had left Brazil with abundant unsold supplies. "It is very expensive for end-users to book something because freight rates have gone through the roof," one dealer said.
Cocoa futures finished lower, driven down by early speculative selling but losses were trimmed late as scale-down trade support kept prices within their recent range. December ended down 11 pounds at 950 pounds a tonne, well above the day's low of 935. The market has held in a narrow band between 931 and 978 pounds for more than three weeks.
"There was spec selling right from the opening," one dealer said, adding the market's failure to make significant headway after setting a six-month low of 931 pounds on August 28 had left it susceptible to weakness.
The International Cocoa Organisation is forecasting a wider than anticipated global cocoa deficit of 156,000 tonnes in 2006/07, executive director Jan Vingerhoets told Reuters on Wednesday. Robusta coffee futures touched a fresh two-month high but ended little changed as the market paused for breath after its recent strong advance driven by fund and speculative buying of the November contract.
November set a peak of $1,928 a tonne but slipped back to end unchanged at $1,904. Dealers said talk of supply tightness ahead of the next crop in top robusta producer Vietnam had helped to fuel the recent rise in prices. November/January widened to more than $110 at one stage on Wednesday but ended little changed at around $100. The switch was trading at about $33 in the middle of last week.