Arabica coffee futures on ICE sank more than 4 percent on Thursday, pressured by the strong US dollar, broad-based commodity selling and a flurry of automatic sell orders triggered around key technical levels. New York cocoa futures nudged down to a five-week low while sugar prices fell further from last week's 1-1/2-year high, joining the session's general weakness in commodity markets.
The 19-market Thomson Reuters CoreCommodity Index tumbled around 1.7 percent as the US dollar index rose to the highest level in seven weeks, making dollar-traded commodities more expensive to investors holding other currencies. July arabica coffee settled down 6.15 cents, or 4.7 percent, at $1.2395 per lb, after falling to $1.237, its weakest since May 9.
"It's a macro selloff. The whole board's red today," said Nick Gentile, managing partner of commodity trading advisor NickJen Capital in New York. Coffee, which extended losses from Tuesday's eight-week high, was also pressured by an improved crop in top grower Brazil, where local analysts Safras e Mercado estimated 10 percent of the 2016-17 crop has been harvested.
"As we move towards 2016-17 the market appears well supplied," said broker Marex Spectron in a report, adding that the prospect of a small global surplus in 2016-17 indicated a sustained bull market is unlikely. Sell-stops were triggered as the July contract fell below the 50- and 200-day moving averages, which were nearly touching one another. The 50-day moving average appeared on track to cross above the 200-day one, which would form a golden cross, a technical formation that can indicate a bull market.
July robusta settled down $31, or 1.9 percent, at $1,638 per tonne as rains in Vietnam improved the outlook for the crop in the world's top robusta producer. The July raw sugar contract settled down 0.11 cent, or 0.7 percent, at 16.7 cents per lb. August white sugar settled down $3.30, or 0.7 percent, at $473.50 per tonne. Cocoa futures were also lower, with July New York settled down $38, or 1.3 percent, at $2,893 per tonne, after falling to $2,884, the lowest since April 13. July London settled down 21 pounds, or 1 percent, at 2,120 pounds per tonne.