Liffe May white sugar falls $5.90 to close at $700.40 a tonne on Tuesday. The market fell sharply on news India would allow 500,000 tonnes of unrestricted exports, but losses had been trimmed by the close. Liffe July cocoa ends 34 pounds higher at 2,085 pounds a tonne.
Market beginning to rebound, with industry buying emerging following the recent slide in values, which saw the second position hit a two-month low of 1,994 pounds on Monday. Liffe May robusta coffee ends $44 lower at $2,569 a tonne. Market slipping back from a three-year high set late last week but remains underpinned by tight supplies.
"The Indian news pretty much hit the market," said Alex Oliveira, senior sugar analyst at brokerage Newedge USA. Short covering limited the sweetener's decline, as some investors viewed the fall as overdone. "People were buying the market on expectations that they weren't going to release as much (as 500,000 tonnes)," one senior London sugar broker said.
"I think you will see at least 1.5 million tonnes of OGL (unrestricted) exports this year. The government is waiting for confirmation of the size of the crop, then they will get a move on," the London broker added.
Technically, traders said the momentum in the May raw sugar contract may point to a test of the 200-day moving average at 25.54 cents. The May/July raw sugar spread, which would normally give indications of nearby tightness has been easing, falling to its lowest level since October 2010. Coffee futures also slid, weighed by chart-based sales after the benchmark May arabica contract failed to breach resistance at $2.83 per lb, on Monday, dealers said.
May arabica coffee on ICE tumbled 3.55 cents to finish at $2.7345 per lb. Dealers said a tight supply outlook and low global stocks continued to underpin the coffee market, although it was currently in a near-term downtrend. "There really is not much roaster participation at these levels," said Nick Gentile, chief trading officer at Atlantic Capital Advisors in Jersey City.
"Right now there's no short-term demand for coffee. There's coffee being offered in Central America and nobody's buying." "Robustas are at best in balance and more probably in deficit," James Hearn, joint head of agriculture at Marex Financial Ltd said. "The Vietnamese have heavily front-loaded their crop and have sold record amounts against the May position."