March white sugar in London finished down $15.9 at $608.60 a tonne on Thursday. Market underpinned by the prospect of strong demand from India. March cocoa in London ended 22 pounds lower at 2,098 pounds, pressured by main crop in West Africa. London January robusta coffee ended down $27 at $1,327 a tonne, weighed by new harvest in top producer Vietnam.
Stronger dollar and weaker equity markets prompted widespread losses in oil and commodities prices. "Fundamentals are taking a backseat to external factors," said Standard Chartered soft commodity analyst Abah Ofon. "People are looking at the dollar index, how equities are performing and also looking at energy prices. They are the main drivers of agricultural markets going forward," he added.
"As long as the dollar keeps improving, values could continue to ease," brokers Sucden Financial said in a market note on Thursday, noting potential support around the 22.50 to 22.80 cent level on raws and $590 to $600 on whites. Sucden noted the whites premium to raws had been widening, boosted by talk of potential whites buying in the coming months from both India and Pakistan.
Dealers said a shortage of sugar in India had triggered talk that the world's top consumer may make fresh purchases soon. Thousands of Indian farmers protesting low state-controlled sugarcane prices forced the postponement of the first day of the parliamentary winter session on Thursday, highlighting rural discontent over government policy.
A doubling of sugar prices this year will trigger a boost in plantings in 2010/11, but the economic crisis and expectations of a global deficit will keep supplies tight and prices high. Cocoa prices were also lower, falling back after a sharp advance on Wednesday. Cocoa prices are now well below 30-year peaks set last month and could fall further with grindings still weak and strong starts to main crop harvests in Ivory Coast and Ghana.
"I think there should be a further drop in prices for cocoa but I think there is going to be good support around the $2,800 level (on ICE cocoa)," Ofon said. Coffee prices were also lower, tracking weakness across the commodity complex. Day-to-day drivers in arabicas futures continue to be external markets, such as currencies, speculative activity and macroeconomic influences, Macquarie Bank said in a note on the coffee market.