Raw sugar futures fell more than 3 percent to the lowest since early September on Tuesday on fund selling after prices fell below technical support, taking the benchmark price below 20 cents a pound. Cocoa prices inched higher while coffee futures were mixed. March raw sugar settled down 0.6 cent, or 3 percent, at 19.75 cents per lb, after falling 3.4 percent to 19.65 cents, the weakest for the front-month since September 2.
Technically, the market was oversold on the relative strength index. "The short-term trend is lower and we expect further liquidation of speculative longs into the Thanksgiving holiday and as the end of the financial year approaches," said Sucden Financial senior trader Nick Penney.
US sugar, coffee and cocoa markets will shut for the Thanksgiving Day holiday on Thursday. Prices have now fallen around 17 percent from a peak of 23.90 cents in early October as funds scaled back their record net long position. "The driver is the (weak) technicals and the Commitment of Traders report, which still shows a large long position," one US trader said.
Dealers said some investors were taking funds out of soft commodities with other options, such as equities, performing strongly at the moment. March white sugar settled down $11.80, or 2.2 percent, at $526.50 per tonne. Dealers noted funds had also been scaling back long positions in both robusta and arabica coffee.
"Funds are questioning long positions at the moment," one London coffee dealer said. January robusta coffee settled up $16, or 0.77 percent, at $2,099 per tonne, after falling more than 3 percent on Monday. March arabica settled down 1.45 cent, or 0.9 percent, at $1.6185 per lb. Cocoa futures were higher with prices pulling away from last week's lows.
March New York cocoa settled up $9, or 0.4 percent, at $2,440 per tonne, up from last week's low of $2,358, its weakest since August 2013. "Demand is improving gradually and technically the market found support," said Peter Mooses, senior market strategist for RJO Futures in Chicago, adding that the market is keeping a close eye on West African weather. "With the drier season coming, production numbers may not be as good as traders are anticipating, which could continue to help the recovery." March London cocoa settled up 14 pounds, or 0.7 percent, at 2,009 pounds per tonne.