NEW YORK/LONDON: Raw sugar and arabica coffee futures o n I CE slid to their lowest levels in nearly two years on Friday as broad selling across commodity markets accelerated downtrends linked to abundant supply.
Yields on US Treasury debt fell to record lows and stock markets plunged after a weak US jobs report aggravated fears of a global slump and sent investors scurrying for safety.
Raw sugar futures fell with other financial markets as economic woes pressured the sweetener, already weighed down by ample supplies. Bargain-hunting and some consumer buying provided a measure of support for raws, brokers said.
"At the beginning of the downward move on sugar I think people were looking at the fundamentals, but now it is just a matter of following other investors," said Romain Lathiere, head of dealing at Diapason Commodities Management.
ICE July sugar futures dropped 0.33 cent, or 1.7 percent, to close at 19.09 cents per lb, the spot contract's lowest settlement since August 2010. Earlier, the contract touched 18.95 cents.
"With the Brazilian real and Indian rupee having already crashed, local sugar prices remain very attractive, and that should keep selling pressure high and keep the incentive to promote strong future production," analyst Shawn Hackett of Hackett Financial Advisors said in a market note.
The Liffe soft commodity markets will be shut on Monday and Tuesday to mark Queen Elizabeth's 60th year on the British throne.
Sterling Smith, vice president of commodity research at Citibank's Institutional Client Group in Chicago, said fears over the euro zone combined with nervousness about a holiday weekend in Britain had piled pressure on financial markets, including softs.
"Everything (in the commodity markets) has varying degrees of not smelling so good," he said.
London August white sugar dropped $5.10, or 0.9 percent, to end at $553.50 per tonne.
COFFEE SETS NEW LOW
Arabica coffee futures on ICE dropped to their lowest level since July 2010.
"The decrease in coffee has been reflecting the next crop in Brazil but is now just following the other markets," Lathiere of Diapason said.
Brazilian agriculture consultancy Safras & Mercado estimates the world's top coffee producer will harvest 54.9 million 60-kg bags of beans in the 2012/13 crop, which endured overly dry weather through its development.
July arabicas on ICE fell 3.15 cents, or 2 percent, to settle at $1.5750 per lb, the lowest settlement since July 2010 for the spot position.
"Technically the market's just been terrible. I also heard of some selling happening in Brazil," said Hector Galvan, senior market strategist for RJO Futures in Chicago.
"It's been in a sold downtrend since October 24 and it hasn't had the ability to recover."
Speculators upped their net short positions in arabica and cocoa futures and options on ICE Futures US in the week to May 29, to the highest in four weeks as both markets hit new lows, Commodity Futures Trading Commission data showed post-market.
They also added to their net short position in raw sugar.
Robusta coffee futures on Liffe joined the retreat, with September dropping $19, or 0.9 percent, to close at $2,143 per tonne.
Robusta bean exports in May from Indonesia's main growing area in Sumatra slumped 54 percent to 9,355.3 tonnes from a year earlier, government data showed.
"Cocoa broke some good support here today on the idea of the terrible outcome of the employment figure that came out this morning," Galvan said, referring to breaking below $2,050.
US job growth braked sharply in May and the unemployment rate rose, putting pressure on the Federal Reserve to ease monetary policy further to shore up a sputtering recovery.
September cocoa on Liffe dropped 17 pounds, or 1.2 percent, to end at 1,451 pounds a tonne.
The cocoa harvest is under way in Indonesia's island of Sulawesi, but daily arrivals began to slow this week, suggesting the crop harvest could end earlier than usual, dealers said.
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