ICE cocoa futures retreated from a four-month high on Wednesday as the dollar strengthened against the euro, triggering fund and investor selling. Coffee and sugar futures also fell under the weight of the firmer dollar as markets consolidated from recent highs.
"The euro has retreated and this has pulled down the softs a little bit," one sugar futures trader said. ICE September cocoa futures fell $6 to $2,782 per tonne at 1525 GMT, having earlier touched a four-month peak of $2,822. London September cocoa was down 2 pounds at 1,780 pounds per tonne after touching a two-month high of 1,801 pounds per tonne earlier in the session.
Dealers talked of better-than-expected demand for cocoa during the global recession against a steady supply outlook. In coffee, ICE July arabica futures fell 1.30 cent to $1.2985, having earlier touched $1.2795, the lowest level since May 18. London September robusta futures fell $11 to $1,546 per tonne.
"I think we'll see coffee drift lower," one dealer said. "The funds are probably holding onto weak longs." Sugar futures consolidated in thin choppy dealings in the middle of their recent 15-16 cents per lb range, and dealers said the softer dollar could trigger higher prices later in the session.
"The sugar futures market went up so much recently that it had to retrace," one London sugar futures dealer said, referring to mild losses in white sugar futures. Another dealer said it's staying in a range, with some producer selling but not much demand. Some dealers said they were surprised at how well-supported sugar prices were, in view of the bumper harvesting of the centre-south Brazilian crop.
However, they noted signs of sturdy demand for the sweetener, bolstering prices. "The 16 cent level is very crucial resistance. Once we cross that level we could go higher still," a dealer said. ICE July raw sugar futures were down 0.07 cent to 15.47 cents per lb, while London August white sugar was down $3.40 to $441.50 per tonne.