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Markets

Raw sugar slips in step with oil; coffee hits two-month low

LONDON: Raw sugar futures on ICE fell on Thursday alongside equities and energy markets while expectations for ample sup

Dec 06 2018

LONDON: Raw sugar futures on ICE fell on Thursday alongside equities and energy markets while expectations for ample supplies pushed coffee prices to two-month lows.

SUGAR

* March raw sugar was down 0.17 cents, or 1.3 percent, at 12.55 cents per lb by 1110 GMT.

* Dealers said the market was dragged down by broader weakness in equity markets and oil prices, coupled with a further decline in the Brazilian currency.

* The recent fall in energy prices has diminished the competitiveness of ethanol, bolstering concerns that mills may switch more production from the biofuel back to sugar.

* "The correlation to the Brazilian real and energy prices has been very, very strong," said Rabobank senior commodity analyst Carlos Mera.

* Market participants were also monitoring India after signs that unfavourable weather may have done little to curb output.

* "Now, when we look at the amount of sugar produced, it's actually higher than last year at the end of November - and that's despite a late start to the crop," Mera said.

* March white sugar fell $2.70, or 0.8 percent, to $340.80 a tonne.

COFFEE

* March robusta coffee was down $9, or 0.6 percent, at $1,571 a tonne after touching $1,565, its lowest since Oct. 2.

* Prices were under pressure from light speculative selling, partly inspired by expectations for a massive crop from top grower Vietnam.

* "The market is well supplied," Mera said. "And now, with dry weather in Vietnam, the harvest is in full swing. There will be a lot of availability."

* Vietnam is expected to export 100,000 to 180,000 tonnes of coffee in December, traders said on Thursday.

* March arabica coffee fell 0.3 cents, or 0.3 percent, to $1.0565 per lb, having touched a two-month low of $1.0545 per lb.

* Colombia is expected to produce about 14 million 60kg bags of washed arabica in 2019, possibly helped by dry weather from the El Nino phenomenon.

COCOA

* March New York cocoa was up $19, or 0.9 percent, at $2,129 a tonne, climbing off an eight-week low of $2,095 set in the previous session.

* March London cocoa rose 12 pounds, or 0.8 percent, to 1,582 pounds a tonne.

* Both markets plunged in the previous session on speculative selling inspired by technical weakness and signs of plentiful supplies from top grower Ivory Coast.

Copyright Reuters, 2018