Raw sugar futures fell sharply to a 10-month trough on Wednesday, after the prior session's move lower formed a technical bearish flag and triggered a fresh bout of selling, while cocoa slumped amid enduring worries about ample supplies.
May raw sugar settled down 0.44 cent, or 2.5 percent, at 17.12 cents per lb, after slipping to 17 cents, the lowest since late-May. The contract extended losses to the session low in the last minute of trade, attracting additional selling after falling below 17.02 cents, last week's low. Total open interest rose for a ninth straight session on Tuesday, reaching 806,906 contracts, the highest since February 15, ICE data showed.
Last week's rebound above 10-month lows prompted selling by producers as well as speculators looking to shed long positions and establish short ones, traders said. "It seems that the trend continues to be lower, as we approach a new Brazilian crush season in which sugar production will be maximized once more, given its price advantage over ethanol," said Nick Penney, senior trader at Sucden Financial, in a market update.
The market, however, was monitoring the damage done by Cyclone Debbie, which hit Australia's cane-growing regions on Tuesday, though the impact on output could take weeks to assess. May white sugar settled down $10, or 2 percent, at $485.30 per tonne. May New York cocoa settled down $43, or 2 percent, at $2,086 per tonne.
May London cocoa settled down 22 pounds, or 1.3 percent, at 1,686 pounds per tonne. Dealers pointed to weakening charts, with both markets extending losses below their 100-day moving averages. "For the mainstay, it seems to be that we have a sizeable surplus," one dealer said. "I think people are trying to digest what is going to be the next move. But I would say overall the bears are still arguably in control."
Ghana's cocoa industry regulator said the world's second-largest producer's $1.8 billion loan for 2016/17 purchases "is all gone" and fresh funds must be sought to complete the season's purchases. May arabica coffee settled up 0.45 cent, or 0.3 percent, at $1.393 per lb. May robusta settled up $3, or 0.1 percent, at $2,171 per tonne. Exports from Vietnam, the world's largest robusta producer, were estimated by the government to have dropped 1.6 percent in the first quarter year-over-year.