Raw sugar futures on ICE fell to a near-three-year low on Monday as strong cane crushing in top producer Brazil kept the market under pressure. Arabica coffee futures on ICE Futures US dropped for the fifth straight day on follow-through weakness and pressure after s report last week showed speculators had shrunk their net short position. Cocoa on ICE and Liffe were little changed as dealers looked to the beneficial rain in main growing region West Africa.
July raw sugar futures closed down 0.08 cent, or 0.5 percent, at 16.81 cents a lb, after dipping to 16.80 cents, their lowest since July 2010. “Good Brazilian centre-south crushing conditions have raised expectations for abundant global supplies. This should continue to act as a significant headwind to global sugar prices,” analyst Luke Mathews of Commonwealth Bank of Australia said in a market note. Dealers said physical buyers were waiting to purchase as they expected prices to head lower.
“Everybody is waiting for Brazil to be in full swing, as they think the price will be lower once Brazil’s crop is coming in large quantities,” said a London-based broker. August white sugar on Liffe eased $3.10, or 0.6 percent, to settle at $474.40 a tonne.
Arabica coffee futures ICE dropped closer toward last month’s three-year low at $1.3270 per tonne, basis second position, with the market weighed by the prospect of a large crop in Brazil. “Technically, Friday was very poor for the charts so there’s some technical follow-through there,” said one veteran US cocoa dealer.
ICE July arabica coffee eased 1.75 cents, or 1.3 percent, to end at $1.3515 per lb. “COT (Commitment of Traders) reports show that the funds have covered a huge amount of shorts over the past few weeks and the short risk to the market is not there anymore.” Speculators cut their net short position in arabica coffee futures and options by 9,214 contracts to 11,531 contracts, US Commodity Futures Trading Commission (CFTC) data showed on Friday.
Liffe July robusta coffee fell $32, or 1.6 percent, to finish at $2,005 a tonne. In London, speculators raised net long positions in robusta coffee and cocoa futures and options on NYSE Liffe in the week to May 14, exchange data showed on Monday. Liffe July cocoa closed down 11 pounds, or 0.7 percent, at 1,538 pounds per tonne. Analysts and traders said the focus was now shifting to West Africa’s coming main crop, although it was too early to predict the size of production.
“Rains have been a lot better in May than in April,” a European analyst said, referring to the poor pod setting in April. Pod setting peaks in July/August and this is when the main crop’s prospects become clearer. Increased rainfall and abundant sunshine across most of top grower Ivory Coast’s main growing regions have increased optimism among growers, farmers and analysts said on Monday. The ICE July cocoa contract settled up $1 at $2,301 a tonne.
