NEW YORK: US cocoa futures on ICE fell 3 percent on Monday, sharply extending losses below a key technical level and pressured by a report that showed the recent rally had been fueled by heavy short-covering. Arabica coffee and raw sugar futures were quietly higher.
The London softs markets were closed for a British public holiday, and the New York markets traded in an abbreviated session. December New York cocoa settled down $90, or 3 percent, at $2,925 per tonne.
"The Commitment of Traders (report) showed massive short-covering into the rally, taking some risk out of the upside," said one US trader. In the week to Aug. 23, when cocoa prices rose to a five-week high and then sold off sharply, speculators boosted their net long position in futures and options to a 3-1/2 month high.
The market extended losses below the 200-day moving average, which it had struggled to stay above, and sell stops were triggered around recent session lows at $2,977 and then $2,940, traders said.
Abundant rainfall last week in most of Ivory Coast's principal cocoa regions could boost the forthcoming October-to-March main crop, but more sunshine is needed to accelerate the growth of small pods, farmers said.
Raw sugar futures rose but stayed within the recent four-week range as traders awaited cane crush data expected this week from Brazilian industry group Unica for the first half of August.
Expectations for cane crush in Brazil's main center-south region ranged from 44.2 million to 48.2 million tonnes, an S&P Global Platts survey of analysts showed. The average estimate of 46.03 million tonnes would be down 4 percent from the year-earlier crush due to rain.
October raw sugar settled up 0.06 cent, or 0.3 percent, at 20.67 cents per lb.
Arabica climbed for the seventh session out of the past eight, having risen above the 50-day moving average. December arabica coffee settled up 0.25 cent, or 0.2 percent, at $1.451 per lb.
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