New York cocoa futures on ICE fell 3.5 percent on Thursday, after a wave of automatic sell orders were triggered and expectations for ample global supplies added to the bearish sentiment. Raw sugar rose to a two-week high, climbing for the fourth straight session, as funds covered short positions.
Trading volume was moderate ahead of the Christmas holiday. March New York cocoa settled down $24, or 1.2 percent, at $1,907 per tonne, after falling 3.5 percent to $1,863.
Prices fell sharply after sell-stops were triggered below $1,894, traders said. March London cocoa settled down 13 pounds, or 0.9 percent, at 1,407 pounds per tonne.
"The specs don't want to go long so, unless they're profit-taking, there's not much support," a dealer said. Dealers also pointed to signs of ample supplies in top grower Ivory Coast, coupled with sluggish appetite from cocoa processors.
"The (port) arrivals have come in slightly better than people were expecting," said one dealer. "And the origins are starting to sell their 2018/19 crops. But there's just not many people around to buy the cocoa." In Cameroon, the world's fifth-biggest grower, farmers have struggled to pay off loans due to falling cocoa prices, limiting their ability to prepare their plantations for next season, farmers and local banks said.
March raw sugar settled up 0.2 cent, or 1.4 percent, at 14.77 cents per lb, after hitting 14.82 cents, the highest for the front month since December 6. It was on track to close 2017 down around 24 percent, its biggest annual drop since 2001.
Total futures open interest dropped 12,551 contracts the past two sessions to 778,472 contracts by Wednesday, as prices rallied nearly 6 percent, exchange data showed. Expectations for rebalancing by index funds, which could see them buy back a chunk of their short positions, has also supported prices, traders said.
Companies in Brazil's main sugarcane belt will likely suspend operation of plants with nearly 9 million tonnes of combined crushing capacity, as cane supplies run low and mills struggle under financial difficulties. March white sugar settled up $5.60, or 1.5 percent, at $386.90 per tonne. March robusta coffee settled down $8, or 0.5 percent, at $1,705 per tonne.
March arabica coffee settled down 0.9 cent, or 0.7 percent, at $1.2225 per lb. "The prospect of high Brazilian and Vietnamese crops is clearly evident here," Commerzbank said in a market note.