NEW YORK: US cocoa futures fell for the seventh straight day on Wednesday, hitting a five-month low, as some investors liquidated long positions in thin holiday dealings as the end of the year approached.
Raw sugar and arabica coffee futures trading on ICE Futures US, were supported by gains in other commodities. The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, was higher as was US crude oil, which approached a 10-week high.
The euro traded above 1.32 against the US dollar for a seventh straight session due to position adjustment going into the end of the year.
A weak greenback provides support to dollar-traded commodities, such as sugar and coffee, attracting buying by investors holding other currencies.
Volume was thin in all three markets as they opened late on Wednesday following the Christmas holiday on Tuesday, with many dealers still away from their desks. The Liffe softs markets remained closed for Boxing Day. The London market will reopen on Thursday.
The benchmark March cocoa futures contract trading on ICE closed down $10, or 0.4 percent, at $2,263 per tonne, the lowest settlement for the contract on the spot continuation chart since July 25.
The spot contract was on track to finish December down more than 10 percent, its weakest monthly performance since November 2011, preliminary Thomson Reuters data showed.
"Cocoa is in the throes of a correction right now," said Sterling Smith, a futures specialist for Citigroup in Chicago. "I think we are seeing some unwinding here. The market really doesn't have a lot of things to drive it higher."
Speculators continue to hold a large net long position in cocoa futures and options, which sat above 28,000 lots in the week to Dec. 18, just shy of the nearly three-year high reached two weeks earlier.
Indonesia, the world's third-biggest cocoa producer, kept its tax on bean exports unchanged at 5 percent, an official at the Trade Ministry said.
Total cocoa futures volume reached just over 5,400 lots, the lowest since Dec. 27, 2011, preliminary Thomson Reuters data showed.
Raw sugar futures on ICE inched higher in consolidative dealings as the market remained in the range it has held for the past three weeks, from roughly 19.60 cents to 18.31 cents per lb, the lowest in more than two years, basis the spot contract .
The benchmark March raw sugar contract inched up 0.03 cent, or 0.2 percent, to settle at 19.05 cents per lb. Total volume reached a mere 14,030 lots, the lowest in exactly four years, preliminary data showed.
Reports for some dry weather in the northeast region of Brazil, the world's biggest sugar producer, attracted some short-covering that helped support the market, dealers said.
Arabica coffee was also viewed as consolidating. It climbed for the third straight day, rising further above the 2-1/2-year low of $1.4220 per lb reached on Dec. 14, basis the second position.
The key March arabica contract rose 1.30 cents, or 0.9 percent, to settle at $1.4830 per lb. Total volume was exceptionally light at just over 5,300 lots, down 75 percent from the 250-day average, preliminary data showed.
The benchmark spot contract has dropped around 35 percent in 2012, putting it on track for its weakest annual performance since 2000, preliminary Thomson Reuters data showed.
The commodity is by far the weakest performer on the CRB index, next to frozen concentrated orange juice, which has dropped about 15 percent since the end of 2011.
Importers were keeping an eye on a potential strike by US dock workers on the East and Gulf coasts. On Monday, the Federal Mediation and Conciliation Service said the parties involved, the International Longshoremen's Association and the US Maritime Alliance, had agreed to attend a meeting ahead of the Dec. 29 contract expiration.
Center>Copyright Reuters, 2012