New York cocoa futures on ICE took their biggest one-day fall in six weeks on Tuesday, pressured by the weak British pound and layers of automatic sell orders, potentially signalling that this year's strong advance may be starting to run out of steam. July New York cocoa settled down $105, or 3.8 percent, at $2,674 per tonne. It dropped to a one-month low at $2,662 in post-settlement dealings.
It was the biggest one-day drop since April 3, taking the benchmark contract nearly 10 percent below last month's 1-1/2-year high. The US market was pressured by the weak pound against the dollar, and the fall was extended after sell-stops were triggered at several levels below $2,748, traders said. The move further pressured the New York premium over London, which traders said has driven demand for US shipments from West Africa.
July London cocoa settled down 57 pounds, or 3 percent, at 1,870 pounds per tonne, the second-position contract's biggest one-day drop since March. The May London contract expired on Tuesday, with its discount to July narrowing sharply to 57 pounds. July raw sugar settled up 0.26 cent, or 2.3 percent, at 11.52 cents per lb. Prices were buoyed by light short-covering by funds, which remain heavily bearish in the commodity due to expectations for a large global surplus, traders said.
Participants were also monitoring weather in top grower Brazil, where light rains are expected this week but may not be enough after a recent dry spell, dealers said. Thailand has allocated an additional 300,000 tonnes of raw sugar for ethanol production this year, amid weak prices and a large global surplus.
August white sugar settled up $1.30, or 0.4 percent, at $322.40 per tonne. July arabica coffee settled down 0.65 cent, or 0.6 percent, at $1.1695 per lb. Focus remained on a large crop from top grower Brazil, though the harvest is expected slightly later than usual, said Ricardo Santos, managing director at Riccoffee. "We're probably going to see harvesting activity until October due to the size of the crop," Santos said. "But one thing is for certain - there is a lot of coffee." July robusta coffee settled down $14, or 0.8 percent, at $1,728 per tonne.