Both raw and white sugar futures hit lifetime highs earlier, on concern about tightening nearby sugar supplies in top grower Brazil, but they reversed lower. The macro level is dominated by the drawn-out talks in Washington to raise the US debt ceiling, with an August 2 deadline looming and raising the prospect Washington would default on its obligations, driving money into safe-have gold and Swiss francs.
October white sugar on Liffe fell $15.70, or 1.9 percent, at $797 per tonne, after earlier setting a contract high of $821. Brazil's sugar industry group Unica earlier this month cut its forecast for sugar production in the key center-south region to 32.4 million tonnes and a number of even lower forecasts have been issued by analysts in the last few days.
"We will see in the forthcoming harvest updates whether these concerns are justified or not and this will decide the short-term direction of the market," said F.O. Licht analyst Stefan Uhlenbrock. A top industry body in India has sought the government's approval for an additional 500,000 tonnes of sugar exports in the year to September, a demand that, if met, could help ease global prices that are creeping up on supply worries from top exporter Brazil.
"Perhaps the bears have a friend at last," brokers Sucden Financial said in a market report on Monday noting the request from the National Federation of Co-operative Sugar Factories. Cocoa futures continued to move lower after the US market posted its biggest decline in nearly three months on Friday, as a large global surplus in the current 2010/11 season was expected.
"There are hedgers who are selling into this market because they're afraid ... they won't get a chance at $3,000 cocoa anymore if the market does turn completely bearish," said Hector Galvan, RJO Futures senior market strategist in Chicago. Technically, the market is also bearish, after ICE September fell through long-term moving averages last week. September cocoa on Liffe settled 31 pounds lower at 1,870 pounds, a five-week low.
Arabica coffee futures on ICE edged up although they remained within striking distance of Friday's six-month low. The market is still viewed as being in a downtrend after speculators increased their net short position to the biggest in 2-1/2 years, in the week ended July 19, US Commodity Futures Trading Commission data showed on Friday. Dealers noted exchange stocks were falling and had now reached their lowest level in 11-1/2 years. Robusta coffee futures on Liffe also rebounded with September up $65, or 3.1 percent, at $2,139 a tonne. The contract dipped to $1,985 last week, its lowest level since December 2010.