Sugar futures on ICE tumbled on Tuesday to their lowest levels since June, pressured by abundant supplies and chart-based sell signals, while cocoa markets extended their bounce above multiyear lows and extremely oversold conditions. Coffee futures were firm.
March raw sugar settled down 0.65 cent, or 3.4 percent, at 18.6 cents per lb after falling to 18.51 cents, the lowest for the spot contract since June 24. Traders said automatic sell orders were triggered below the 18.70-18.80 cents level, where several session lows dating back as far as July congregated to form technical support.
Oversupply and fund liquidation pressured prices, traders said. Sugar production may rise to a record level in 2017/18, leading to a small global surplus following two deficit seasons, commodity trader Groupe Sucres et Denrees said. March white sugar settled down $14.20, or 2.8 percent, at $499.20 per tonne after hitting $498.20, a level not seen since June 7.
"Some reports suggest the (central south) Brazilian producers are further ahead with their 2017/2018 pricing than 12 months ago with their 2016/2017 pricing," Agrilion Commodity Advisers said in a note.
Cocoa prices were on track to close 2016 lower, breaking a four-year streak of gains. Despite the short-covering rally of the past two sessions, traders said, the mood remained bearish on the prospect of a 2016/17 global surplus. Since the start of the season, cocoa arrivals at ports in top grower Ivory Coast were up 5 percent from a year earlier, exporters estimated, while rain in most growing regions was expected to boost next year's crop.
March London cocoa settled up 35 pounds, or 2 percent, at 1,816 pounds per tonne. It had reached a nearly three-year low of 1,714 pounds on Monday. Traders said a small delivery was expected against the London December cocoa contract, which expired at a large discount to March . This provided little incentive to tender. "Who is going to deliver cocoa when the spread is trading around 49 under?" one dealer said. "No one. There will be very few tenders tomorrow."
March New York cocoa settled up $49, or 2.2 percent, at $2,289 per tonne, well above the 3-1/2-year low of $2,144 reached on Monday when the market formed an outside reversal higher, a positive move from a technical perspective. In coffee, March arabica coffee settled up 0.85 cent, or 0.6 percent, at $1.4285 per lb. March robusta settled up $29, or 1.4 percent, at $2,046 per tonne as rain delayed Vietnam's harvest.