NEW YORK/LONDON: Raw sugar futures on ICE turned sharply lower after tapping a seven-week high but failed to reach a key resistance level on Wednesday, triggering automatic sell orders and creating a potentially bearish technical formation.
Coffee and cocoa futures were also lower, in line with the weak Thomson Reuters CoreCommodity Index that is made up of 19 markets including oil.
October raws settled down 0.51 cent, or 2.46 percent, at 20.22 cents per lb, after trading widely from a seven-week high of 20.94 cents to a session low at 19.93 cents.
Raw sugar futures initially extended gains from the prior two sessions on buying fuelled partly by the prospect of a lower cane crush in Center-South Brazil for the second half of August following rains.
"Prices have suddenly come back under pressure with October (contract) breaking through initial support at 20.56 with sell stops getting triggered as prices broke through 20.40," said Agrilion Commodity Advisers in a note, adding that a settlement below 20.2 cents could open the door to re-test the psychologically important 20 cents.
The wide trading range created an outside day lower, a technical chart formation made when the contract rises above the prior session's high and falls below its low. This has the potential to attract technical selling.
"I think people over reacted to a bit of rain in Brazil. We've got a bumper crop for the first half of August," one trader in London said.
Dealers said physical off take was sluggish at current prices and nearby supplies ample, with October raw and white sugar futures at substantial discounts to more distant positions. October white sugar settled down $12.20, or 2.3 percent, at $529.90 per tonne. Arabica coffee prices were also lower, sharply extending losses after falling below the 50-day moving average.
December settled down 4.15 cent, or 2.8 percent, at $1.431 per lb, breaking a four-day streak higher.
Dealers said the market consolidated lower after being supported by concerns that cold weather in southern Brazil could diminish the outlook for next year's crop in the world's top producer, though most downplayed the extent of the threat.
November robusta settled down $11, or 0.60 percent, at $1,810 per tonne.
Cocoa futures also turned lower, along with larger commodity markets. December New York cocoa settled down $24, or 0.8 percent, at $3,017 per tonne, while December London cocoa settled down 20 pounds, or 0.8 percent, at 2,371 pounds per tonne.
Comments
Comments are closed for this article.