ICE Arabica coffee futures sank for a seventh session on Tuesday, amid expectations of ample supplies from top producer Brazil and a growing bearish stance held by speculators. ICE raw sugar and cocoa futures recovered slightly from a cross-commodities sell-off during the previous session, though investors remained cautious on fresh concerns over financial stability in the euro zone.
Global stock markets extended declines on concerns over a Cypriot bail-out plan. The entire soft commodities basket fell on Monday, and the ICE arabica market, weighed by a bearish speculator stance and hefty Brazilian supplies, failed to recover on Tuesday. ICE May arabica coffee on ICE Futures US sank 1.25 cent, or 0.9 percent, to finish at $1.3310 per lb, after earlier dipping to a contract low of $1.3255 a lb.
The most-active May contract has fallen each of the last seven sessions. "We're oversupplied, the roasters have enough coverage. They'll buy, but only on a scaled-down basis," said Nick Gentile, senior partner of commodity trading consultancy Atlantic Capital Advisors. He said there were also some new short positions.
On Monday, the second-month, then the most-active contract, touched $1.3405, the lowest level for the second month since June 2010. Open interest has continued to climb, reaching 173,545 contracts on Monday, the highest level since July 2010, reinforcing expectations that speculators are boosting their bearish stance in the well-supplied market.
The prospect of a large "off-year" crop in top producer Brazil in 2013/14 has weighed on prices. "Coffee producers in Brazil are already withholding supply in a bid to shore up prices," said Commerzbank in a daily commodities note. May robusta coffee futures on Liffe settled down $21, or 0.97 percent, at $2,155 a tonne, after hitting a five-month high of $2,216 last week on concerns that dry weather would affect crops in Vietnam.
May raw sugar futures on ICE inched up 0.02 cent, or 0.1 percent, to close at 18.31 cents a lb, gaining slightly after 3-percent tumble during the previous session. Sugar output in top producer Brazil is expected to reach 40.7 million tonnes in the 2013/14 season, up 5.7 percent from the 38.5 million tonnes produced a year earlier, sugar and ethanol analytics firm Datagro said on Tuesday.
Monday's losses erased much of the gains raw sugar had seen during the previous 1-1/2 weeks amid a short-covering rally. May white sugar on Liffe was up $2.40, or 0.5 percent, to close at $529.80 a tonne. May cocoa on ICE gained $11, or 0.6 percent, to settle at $2,099 a tonne. Prices have found support now that the main crop harvest has passed in Ivory Coast, the world's top producer, Price Futures Group's Scoville said. Liffe July cocoa futures gained 4 pounds, or 0.3 percent, to settle at 1,418 pounds per tonne.