Arabica coffee futures on ICE sank more than 5 percent on Thursday, falling to a 6-1/2-month low on technical long-liquidation, while raw sugar fell on talk that India could soon launch raw sugar export incentives. New York futures fell for the ninth day out of 10 sessions to a one-year low as the commodity complex tumbled and the US dollar rose.
Arabica coffee has been pressured by forecasts for much-needed rain in parts of the coffee region in top-grower Brazil, but the market extended losses as short-term buyers exited their long positions, traders said. ICE March arabica settled down 7.7 cents, or 4.6 percent, at $1.60 per lb, after falling 5.4 percent to the lowest since July at $1.5870 with sell-stops having been triggered below this week's lows.
March robusta coffee closed down $40, or 2 percent, at $1,944 a tonne. Sugar markets also tumbled, with March raw sugar closing down 0.31 cent, or 2 percent, at 14.85 cents a lb. Traders said talk that India could introduce raw sugar export incentives weighed on prices as it would add sugar to global supplies.
"This perception of the subsidy is what's making everyone a little afraid," said Bruno Lima, manager for sugar and ethanol at INTL FCStone in Campinas, Brazil. "Maybe the real impact might be smaller than expected, but the psychology of it is big." March white sugar settled down $7.30, or 1.9 percent, at $384.60 a tonne. The market shrugged off the first 2015/16 forecast from independent commodities analyst Datagro, which said sugar production in Brazil's main center-south cane growing region will be flat year-on-year.
Traders said they were surprised by the upward revision of the present crop and others focused on forecasts for much-needed rain there. The market also ignored analyst Green Pool's forecast for the first global sugar deficit in six years, predicting more deficits could follow over several years. A Reuters poll showed that raw sugar prices are unlikely to make any substantial recovery this year.
Cocoa continued to fall in heavy volume buoyed by March/May spreading and weighed down by abundant supplies and falling demand. ICE March cocoa closed down $29, or 1.1 percent, at $2,686 per tonne, just above the session low at $2,683, the lowest level since January 2014. London May cocoa ended down 3 pounds, or 0.2 percent, at 1,877 pounds per tonne.