Cocoa futures on ICE fell to six-week lows on Monday, weighed down by speculative selling in light pre-holiday dealings, while sugar and arabica coffee prices also fell, pressured by the falling Brazilian currency and oil prices. Brent crude oil prices hit their lowest in more than 11 years on signs that swollen global supply looks set to outpace tepid demand again next year.
This pushed the 19-market Thomson Reuters CoreCommodity Index lower, where it hovered just above last week's 2002 lows. March New York cocoa on ICE settled down $13, or 0.4 percent, at $3,239 per tonne, after falling to the lowest since November 9 at $3,205. March London cocoa settled down 9 pounds, or 0.4 percent, at 2,248 pounds per tonne, having fallen to 2,222 pounds, the lowest since November 11.
Traders said cocoa prices were pressured by speculative selling and expectations for weak demand to continue, with the bullish factors - decreasing weekly arrivals in top grower Ivory Coast and concerns about West Africa's Harmattan wind - already worked into prices. They noted commercial buying was seen at the lows. Raw sugar futures fell in a technically driven correction after Friday's rally, finding support at the 50-day moving average.
March raw sugar futures on ICE settled down 0.13 cent, or 0.9 percent, at 14.97 cents per lb. March white sugar settled down $2.7, or 0.7 percent, at $411 per tonne. Dealers said additional pressure came from the weak Brazilian real, which extended losses to a 2-1/2-month low against the dollar, boosting incentives for Brazilian producers to lock in returns from sales of dollar-denominated coffee and sugar.
Also bearish, Michael Liddiard of consultancy Agrilion estimated that around one-third of mills in center-south Brazil were still operating, compared with less than 10 percent at this time of year in a typical season. "After more than a year of low prices, a shrinking global surplus, coupled with limited reinvestment in cane plantings, should conspire to lift prices year-over-year in '15/16," said Morgan Stanley Research in a note, forecasting an average price at 17.30 cents per lb in 2016, with average ranges from 13.8 cents to 20 cents.
Morgan Stanley also slightly lowered its forecast for a global deficit of sugar supplies in 2015/16. March arabica coffee settled down 1.5 cent, or 1.3 percent, at $1.175 per lb, while March robusta coffee settled down $5, or 0.3 percent, at $1,508 per tonne.