Liffe sugar plummets

Liffe August white sugar closes $20.50 lower at $703.00 per tonne on Tuesday. Market correcting lower after recent strong advance to a three-month peak. Prospects for an influx of Indian white sugar onto the market also weighed. Liffe September robusta coffee ended off $80 at $2,391 a tonne after touching $2,372, the lowest level for the benchmark second month since late April. System fund selling helped to fuel the market's decline.
Liffe September cocoa ended 1 pound higher at 1,846 pounds a tonne. Market appears to have found a bottom after recent downward slide. Raw sugar retreated from a seven-week high, although remained underpinned by strong demand and congestion at ports in key producers.
"We're seeing a hell of a lot of producer selling at these levels, on the nearby it's Brazil selling, further down the board it's the Far East selling," a London-based broker said. Liffe white sugar futures corrected lower due to prospects for an influx of Indian white sugar to the world market, dealers said.
"That's (India news) probably taking the edge off the whites and the spread structure," said James Kirkup, head of sugar brokerage at ABN Amro Markets (UK) Ltd. Indian sugar millers want to export an extra 1.5 million tonnes of the sweetener under the Open General Licence (OGL) scheme this season with a bumper harvest likely, Narendra Murkumbi, president of the Indian Sugar Mills Association, said on Tuesday.
Sugar output in Brazil's centre-south picked up in the second half of May, data from the cane industry association Unica showed on Monday. "The Brazilian crop is probably priced in by now," VTB Capital analyst Andrey Kryuchenkov said, adding that fundamentally the sugar market looked comfortable. The world sugar market is expected to switch into surplus in 2011/12 as producers respond to historically high prices. "There's a bit of system fund selling around today and that's just pressuring the market down a little bit," a London-based broker said.Vietnam, the world's top robusta producer, is in its seasonal lull between crops, with harvest usually starting in October/November.
Abundant rains in Ivory Coast's cocoa growing regions last week raised concerns over bean quality during the remainder of the April-September midcrop, farmers and analysts said. Dealers said industry were buyers below the market in London. "Industry are looking to buy 30 to 50 pounds below the market," a London-based broker said.