Raw sugar tumbles on weak Brazil currency, arabica coffee drops

Raw sugar futures on ICE sank more than 3 percent in heavy volume on Thursday, while arabica coffee also dropped, with both markets pressured by the weak currency in top grower Brazil. Cocoa futures extended losses to three-month lows. July raw sugar settled down 0.47 cent, or 3.9 percent, at 11.73 cents per lb, after falling to 11.70 cents, the weakest price for the front month since May 21.
This marked the spot contract's second steep drop this week, with it down around 6 percent this week so far, after a truckers' strike in Brazil ended. The Brazilian real plummeted to its weakest in more than two years, as concerns over the nation's fiscal outlook added fuel to a sell-off despite increased central bank intervention.
This attracted heavy selling in raw sugar futures, as the move made sales more attractive in local currency terms to producers in the world's top exporter, while triggering automatic sell orders below recent session lows, traders said. "We broke Monday and Tuesday lows (of 11.86 and 11.88 cents respectively) and there were a few sell-stops that went off," one London dealer added.
The expectation by some for cane-based ethanol prices in Brazil to fall, and potentially leave more cane available to be processed into sugar, also pressured prices, traders said. August white sugar settled down $11.70, or 3.4 percent, at $335.60 per tonne. July arabica coffee settled down 2.55 cent, or 2.2 percent, at $1.157 per lb, after dipping to a three-week low at $1.1565.
The spot contract has fallen more than 5 percent this week so far, on track for its biggest weekly drop this year. Brazil's tumbling currency against the US dollar also pressured arabica prices, although the pace of producer selling in the world's top grower remained slow, traders said.
Scale-down commercial buying prevented deeper losses, traders said. Trade in arabica coffee in Brazil has slowed to a trickle as stocks dwindle between harvests and merchants deal with lingering transport disruptions. July robusta coffee settled down $18, or 1 percent, at $1,733 per tonne.
September New York cocoa settled down $29, or 1.2 percent, at $2,328 per tonne. It fell to a low of $2,320, the lowest since March 2. September London cocoa settled down 25 pounds, or 1.5 percent, at 1,679 pounds per tonne, with a session low of 1,676 pounds, the lowest since March 5.