NEW YORK/LONDON: Sugar and coffee futures fell Wednesday as traders awaited results of a crucial European summit seeking solutions to the euro zone debt crisis.
Cocoa futures ended higher.
New York's March raw sugar contract fell 0.56 cent to trade at 26.38 cents a lb at 12:10 p.m. EDT (1610 GMT), while London's December white sugar contract dropped $10 to trade at $718.50 a tonne.
Market expectations that EU leaders will come up with a comprehensive solution to the debt problem have dipped as political wrangling ahead of the meeting has continued.
"We're seeing a general sell-off due to a lack of a strong plan out of Europe," said Mike McDougall, vice-president at brokerage Newedge USA,
"Concerns (are) heightening that the outcome to contain Europe's sovereign debt crisis in today's EU summit could fall short of expectations," Barclays Capital said.
Dealers said the sugar market was also supported by worries that rains in Central America could limit the amount of sugar available for delivery against the December contract, causing its premium to March to widen sharply this week.
McDougall said talks in Europe are "not making any serious progress" and this has prompted a setback in the rally sparked by initial optimism.
In arabica coffee, the benchmark December futures contract reversed lower in narrow dealings on continued fears about the euro zone debt crisis, dealers said.
New York's December arabica coffee futures slipped 0.20 cent to trade at $2.3635 a lb at 12:12 p.m. London's January robusta contract fell $11 to trade at $1,862 a tonne.
"There are apparently still some fears over the EU," said Jack Scoville, senior analyst for The Price Group in Chicago.
Concern about crop damage in Central America cropped up due to heavy rains over the past few weeks.
"There is reason for concern, because there has been lots of rain recently in Central America and Colombia, which puts into danger the 2011/12 crops which are due to be harvested soon," said Stefan Uhlenbrock, soft commodities analyst with Germany's F.O. Licht.
The rains have caused infrastructure damage and coffee cherries to fall from trees and could also damage quality.
"Infrastructure has been affected severely in certain places and there will be delays to the shipment of beans," Uhlenbrock said.
COCOA UP
Cocoa futures ended higher, with US cocoa futures up in heavy volume as focus shifted to the rolling of positions out of the December contract into March, ahead of the index fund roll set to begin Oct. 31, dealers said.
First notice day for the December contract is Nov. 16.
New York's December cocoa futures went up $57 or by 2.16 percent to finish at $2,693 per tonne. London's December cocoa contract gained 26 pounds to finish at 1,700 pounds a tonne.
The move higher triggered buy-stops around $2,700, basis December, dealers said.
Harvest is under way in top producers Ivory Coast and Ghana, and dealers said farmers had been holding back waiting for better prices.
Open interest rose 2,825 lots to 196,670 lots by Oct. 25, a record level for ICE cocoa futures. This level is down only 329 lots from Liffe cooca's open interest at 196,999 lots, which is typically the significantly larger market.
ICE cocoa options open interest also sat at a record, climbing 245 lots to 133,517 lots by Oct. 25.
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