US cocoa futures dove to their lowest level in almost 2-1/2 years on Thursday as a broad commodities sell-off added pressure to a market already weakened by the quickening harvest in West Africa. Raw sugar slid to a five-month low and coffee suffered as well as commodity traders feared Europe's worsening debt crisis could start to erode demand for raw materials.
Wall Street stocks, which were flat earlier, fell nearly 2 percent. New York's most-active and benchmark March cocoa contract fell $31 to close at $2,505 per tonne, having dropped to a new 2-1/2 year intra-day low at $2,490. London's March cocoa futures slipped 4 pounds to end at 1,604 pounds per tonne.
"The harvest in cocoa is in full swing," said Nick Gentile, head of trading operations in commodity fund Atlantic Capital Advisors in New Jersey. The flow of beans from top producer Ivory Coast is now running above the pace of last season after a slow start. Cocoa arrivals at Ivory Coast's port of San Pedro reached 129,222 tonnes by November 13 since the start of the season in October, up almost 5 percent from the same period last year, according to data from the Coffee and Cocoa Bourse (BCC).
Dealers noted that the proposed reform of the Ivory Coast cocoa sector, which will guarantee farmers a minimum selling price and see the country attempt to sell forward up to 80 percent of its crop, was weighing on the price outlook. "The potential start to the Ivory Coast selling forward the 2012/13 crop from January onwards, in other words they would be selling two crops at the same time, that's one potential bearish element," said Eric Sivry, head of agricultural options brokerage at Marex Spectron. Raw sugar futures fell as offtake by Malaysia and Tunisia failed to lift sweetener values.
Malaysia will buy 1 million tonnes of raw sugar per year over the next three years from Cargill. Tunisia bought 14,000 tonnes of white sugar for arrival between December 15 and January 15, a government official said on Thursday. ICE March raw sugar futures fell 0.36 cent to trade at 24.16 cents a lb at 12:56 pm EST (1756 GMT), having traded at 24.14 cents which is the lowest level since June 8. London's March white sugar futures lost $6.60 to end at $629.00 a tonne.
The market digested news the International Sugar Organization forecast a global sugar surplus of 4.46 million tonnes in 2011/12 but was not certain that the surplus would continue into 2012/13. March arabica coffee futures on ICE dropped 2.30 cents to trade at $2.3675 per lb at 12:58 pm January robusta coffee on Liffe lost $17 to finish at $1,853 a tonne.