New York cocoa futures fell back on Thursday after three days of gains, following the US Federal Reserve's increase in interest rates which strengthened the dollar, making commodities denominated in the currency relatively more expensive.
May New York cocoa was down $52, or 2.25 percent, at $2,259 a tonne at 1500 GMT. London cocoa futures followed suit with a less dramatic slide, as this week's rally ran out of steam. Dealers said a recent pick-up in the pace of port arrivals in Ivory Coast had reinforced concerns about a potential global surplus in the current 2016/17 season. May London cocoa was down 8 pounds, or 0.4 percent, at 1,828 pounds a tonne.
"Short covering has waned a little bit, so the market could easily sit back and work within the established low range," a trader said. A corrective bounce had led prices higher this week after going deep into oversold territory and multi-year lows.
Robusta coffee futures eased back after rising earlier this week on a slowdown in Vietnam's harvest and the possibility that Brazil may import coffee for the first time in decades after a drought hit domestic production.
Some dealers said there were still major obstacles to overcome and imports may not actually take place.
"It will take so long to get through (the approval process) that I just don't think it (importing) is going to happen. I think it is just pie in the sky," one dealer said.
Rains in Vietnam were slowing the harvest in the world's largest robusta producer and leading to concerns about the quality of the crop. "It is going to delay it coming out but I don't think it is going to reduce the size of the harvest," one dealer said. March robusta coffee was $16 or 0.8 percent lower at $2,037 a tonne.
March arabica coffee was down 4.45 cents or 3.1 percent at $1.3970 per lb. Sugar futures had a modest relief rally after prices plummeted this week. March raws were up 0.14 cents or 0.8 percent, at 18.17 cents a pound. "There's been 12 days of absolute obliteration," a trader said, "so this rally is nothing to get excited about."
Funds have been liquidating long positions on weak chart patterns. March raw futures peaked this year at 23.90 cents on Oct. 6, only to tumble rapidly to their current levels. A trickle of offtake was to be expected at these levels, the trader said. March white sugar futures were also up $2.6 or 0.5 percent, at $488.3 a tonne, having earlier touched a new six-month low of $484.