New York cocoa futures on ICE slid on Tuesday by the most in more than a year, tumbling from the prior session's near-five-year high after a flurry of early morning sell orders triggered a circuit breaker that briefly halted trade. Arabica coffee pared sharp losses in thin dealings, after diving four cents within the first minute of trade, also triggering a circuit breaker in a move that surprised traders who said it was overdone.
Raw sugar also fell, pressured by weak oil prices. Soft commodities slumped along with the broader commodities sector, dragging the 19-market Thomson Reuters CoreCommodity Index to a 13-year low. March New York cocoa settled down $101, or 3 percent, at $3,316 per tonne in heavy volume, after falling to a one-month low at $3,280. This took the benchmark contract off Monday's peak, which was the highest since March 2011.
The $100 drop within seconds caused trade to halt for 30 seconds, and fueled speculation that a commodity fund might have been liquidating positions. "2015/16 could see an even greater surplus if demand doesn't rebound but the market first needs to get through the next two months to see how production will fare in West Africa," said Judith Ganes Chase, president of J. Ganes Consulting. "And so it is unlikely that the market will keep tumbling as long as there is evidence of a strong Harmattan,"
London March cocoa settled down 45 pounds, or 1.9 percent, at 2,281 pounds per tonne, after touching 2,332 pounds, equalling Monday's highest since March 2011. Arabica coffee futures pared steep losses with some pressure coming from plentiful rains in some Brazilian coffee growing areas, though north-east was forecast to remain dry. ICE March arabica coffee settled down 0.85 cent, or 0.7 percent, at $1.252 per lb after falling to $1.21 in the first minute of trade.
January robusta coffee settled down $4, or 0.3 percent, at $1,531 per tonne. March raw sugar settled down 0.3 cent, or 2 percent, at 15 cents per lb. "If energy prices come down, generally the other commodities do too," said Michael McDougall, director of commodities for Societe Generale in New York. "It indirectly affects the costs of production, of transport." Brazilian output figures for the second half of November met market expectations. ICE March white sugar futures settled down $6.30, or 1.5 percent, at $406.10 per tonne.