Coffee futures dropped on Monday, with Liffe robustas falling to an eight-month low while ICE arabica coffee reached a 4-1/2-month low, as a firm dollar contributed to weakness in soft commodity markets. Sugar and cocoa futures were mixed but little changed.
The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, inched down to the lowest level in nearly four months as the euro fell to a near two-month low against the dollar. Investors favoured low-risk assets as they awaited the US elections on Tuesday. January robusta coffee futures dropped $24, or 1.2 percent, to settle at $1,952 a tonne, after touching the lowest for the second position since March 7 at $1,935.
Dealers said the market remained under pressure from the prospect of another large crop in top robusta producer Vietnam, where the harvest is under way. "The market looks at it (the harvest) and they reckon the crop is going to be a quite substantial amount, and nobody wants to buy," said a London-based broker, noting that trading volumes were low as investors remained cautions ahead of the US presidential election.
December/March spreading in the arabica coffee market, however, helped to lift volume there. The spread's discount narrowed to close at 4.90 cents, from 5.05 cents per lb in the previous session, a 1-1/2-year high, a bearish factor indicating plentiful supplies. December arabica coffee futures closed down 3.80 cents, or 2.5 percent, at $1.5090 per lb, the spot contract's lowest settlement since June 20.
"The longer-term trend with the fundamentals where they are is still negative. I would expect we'll see that trend continue. We may well have a short-term pop or correction, but overall the market is going to continue to be under pressure," a British-based broker said. Speculators raised their net short position in ICE arabica futures for a fourth straight week in the week to October 30, US Commodity Futures Trading Commission data showed on Friday.
Cocoa futures trading on ICE Futures US pared earlier gains and settled down a shade as the weak pound added pressure. Earlier, the market found chart-based support after climbing above the 100-day and 200-day moving averages. December/March spreading also helped to lift volume ahead of the spot contract's first notice day November 16.
ICE December cocoa inched down $3 to settle at $2,444 per tonne. Cocoa production from top grower Ivory Coast's October to March main crop will reach around 1.06 million tonnes with disease and cross-border smuggling likely to have little effect on output, Swiss chocolatier Barry Callebaut said. Benchmark Liffe March cocoa futures inched up 2 pounds to end at 1,580 pounds per tonne.
Raw sugar futures moved sideways.March sugar futures fell 0.12 cent, or 0.6 percent, to settle at 19.33 cents a lb as the market continued to consolidate just above a six-week low set last week. December white sugar on Liffe finished up 50 cents, or 0.1 percent, at $537.60 per tonne.