Raw sugar futures on ICE tumbled more than 3 percent on Wednesday, with speculative selling pushing the market to a seven-week low, while robusta coffee futures on Liffe turned higher after dropping to a nine-month low for the second straight day Due to harvest pressure. Cocoa markets fell more than 2 percent below key levels on talk that the world's second-biggest producer, Ghana, was selling. Arabica coffee on ICE inched higher.
The Thomson Reuters-Jefferies CRB index dropped about 2 percent as oil fell sharply, with investors focusing on economic growth problems in the United States and Europe. The firm greenback added pressure to dollar-priced commodities. In New York, March raw sugar futures fell 0.64 cent, or 3.3 percent, to settle at 18.95 cents. It is the first time the spot contract has settled below 19 cents in seven weeks. The market also anticipated new data from Unica, Brazil's cane industry association, which is expected to show an improved outlook for production in the country's key center-south region on Thursday. "We think markets are overly optimistic about the Brazilian harvest. It still has to be seen whether the increase expected can be realised," said Commerzbank analyst Michaela Kuhl.
December white sugar on Liffe closed down $10.40, or 1.9 percent, at $531.00 per tonne. January robusta coffee futures turned positive, closing $10 higher, up 0.5 percent, at $1,929 a tonne. The contract fell to $1,906 earlier in the session, the lowest level for the second-month since February 10.
"You've got a big crop coming out of Vietnam in the next month or so, technically the market looks weak, and the funds that were long are now liquidating their positions," a London-based broker said. Technical analysis showed that prices could slip further before finding support, the broker said. December arabica coffee futures finished up 0.60 cent, or 0.4 percent, at $1.5120 per lb. The contract hit $1.5035 on Tuesday, the lowest level for the front month since June 21. The contract found support above $1.4820, the two-year low hit in June.
Position rolling out of the December contract into March dominated the session, with the spread flat around 4.80 cents per lb. The spread was unusually wide, however, and was viewed as bearish to the market. Cocoa futures dipped as analysts noted origin selling from Ghana, with ICE March cocoa easing $67, or 2.7 percent, to settle at $2,399 per tonne. The contract extended losses after falling below its 100-day moving average at $2,416.
Heavy December/March spreading ahead of the spot contract's first notice day November 16 helped lift total volume above 50,000 lots, more than double the 30-day average, preliminary Thomson Reuters data showed. Open interest has been falling, dropping by 4,620 lots to 193,492 lots on November 6, the lowest since August 30. In mid-September, it reached a record high at 207,128 lots, ICE data showed. Benchmark Liffe March cocoa futures fell 36 pounds, or 2.3 percent, to settle at 1,550 pounds per tonne.