LONDON: London cocoa futures fell sharply on Thursday, hitting a three-week low on a wave of selling against a backdrop of ample global supplies, while raw sugar fell from a five-week high touched a day earlier.
COCOA
March London cocoa was down 44 pounds, or 3.2 percent, at 1,330 pounds a tonne by 1459 GMT, after hitting a session low of 1,322 pounds, its weakest since Dec. 12.
Dealers pointed to persistent speculative selling fuelled by stronger-than-expected arrival figures in the Ivory Coast, which have recently bolstered output expectations.
"The funds have been quite aggressive in being short cocoa," said one dealer. "They obviously feel that, with another major surplus around the corner, it's going to take a lot to digest all the cocoa from the last two years."
Dealers also pointed to significant producer hedging against a backdrop of lacklustre demand from cocoa processors.
"The industry is believed to about one year forward cover, so they're in no hurry to support the price," the dealer said. "And origin is selling into the market every day."
A stronger British pound was also adding pressure.
March New York cocoa also fell $48, or 2.5 percent, to $1,859 a tonne.
SUGAR
March raw sugar was down 0.13 cent or 0.9 percent at 15.18 cents a lb, after touching a low of 14.85 cents.
On Wednesday, prices rose to 15.37 cents, their highest since Nov. 28. The market has recently rallied on expectations that index funds will buy about 60,000 lots to rebalance their investments after sugar's poor performance in 2017.
Dealers pegged Thursday's weakness to deteriorating chart signals as a weak close undermined the technical structure and stalled speculative buying.
But downside was limited, dealers said, as speculators still hold a large net short position.
Prices were also supported by a firmer Brazilian real, since it discourages producers from selling.
"The real has strengthened a little recently which perhaps takes a little wind from the sails of the sugar bears," said Sucden Financial's Tom Kujawa in a note.
March white sugar was down $3.10, or 0.8 percent, at $396.20 a tonne.
COFFEE
March arabica coffee was down 1.05 cents, or 0.8 percent, at $1.2990 per lb.
Prices earlier this week rallied sharply to their highest since Oct. 10, 2017.
March robusta coffee was down $11 or 0.6 percent at $1,724 a tonne.
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