Cocoa futures fell on Thursday, consolidating the extended downward trend of recent weeks which took both London and New York to three-year lows. March New York cocoa was down $61, or 2.7 percent, at $2,218 a tonne, at 1528 GMT, having hit a low of $2,209 earlier. March London cocoa was down 37 pounds, or 2 percent, at 1,815 pounds a tonne.
New York and London cocoa futures plummeted to over 3-year lows on December 9 on strong supply and forecasts of a global surplus next year. "The market is consolidating what has been an extended trend down. We have had a fair bounce off the lows, mainly driven by short covering," said one dealer. "A lot of perceived bearish fundamentals are already in the market," he added. "The only blossom in the landscape might be a big harmattan."
The harmattan, a dry dusty wind from the Sahara, descends on top cocoa grower Ivory Coast each year in late January. Last year's particularly strong winds damaged the crop, pushing prices up. Farmers this week said they expected a mild harmattan. Robusta coffee futures fell, although nearby supply remained tight as rains in Vietnam disrupted harvesting and affected bean quality. Dealers said hedging sales related to the flow of supplies out of Vietnam had weighed on prices in thin volume but the overall picture remained bullish.
"In London there is some Vietnam hedging going on. Nobody is taking the other side, they are going down to market when they don't really need to," said a trader. "Prices should go back up in the new year." March robusta futures were down $32, or 1.5 percent, at $2,081 a tonne. Prices in Vietnam, the top robusta producer, were slashed as farmers sought buyers in a reluctant market with trade winding down before year-end holidays and the Tet festival in late January.
March arabica coffee was down 2.5 cents, or 1.7 percent, at $1.4210 a lb. Sugar futures were trading in a range, and volumes were down to a trickle with holidays around the corner, but traders said there could be more fund selling to come before the year end. March raws were flat. "We expect a test of the recent lows below 18 cents as we suspect there is more Fund/spec liquidation ahead going into year end," said Nick Penney, senior trader at Sucden, in a note. White sugar March futures were down $0.9, or 0.2 percent, at $490.9 a tonne.