LONDON: Raw sugar futures slumped on Tuesday, pressured by a firmer dollar and lacklustre buying interest, while robusta coffee was pushed to a 1-1/2 year low by speculative selling against a backdrop of strong output from top grower Vietnam.
SUGAR
March raw sugar was down 0.29 cent, or 2 percent, at 14.49 cents per lb by 1444 GMT, extending losses from the prior session when prices fell as much as 3.6 percent.
The market widely expected index fund to buy some 60,000 lots as part of their rebalancing, but sentiment soured on Monday as the buying failed to materialise.
Although prices partially recovered before Monday's close, dealers noted the technical structure was battered and the market remained vulnerable to further selling.
"The excitement over fund short covering and index fund re-weighting is dying down," Nick Penney, senior trader at Sucden Financial, said in a note. "We expect sugar to continue its lower path."
A stronger US dollar also weighed on prices.
March white sugar slipped $6.90, or 1.8 percent, to $384 a tonne, partly pressured by selling from Thai producers.
COFFEE
March robusta coffee was up $12, or 0.7 percent, at $1,698 a tonne, reversing course after hitting $1,672, the weakest for the second position since June, 2016.
Expectations of strong production in top grower Vietnam were weighing on prices and inspiring speculators to short-sell, dealers said.
"It's a big crop - everybody can see that and it's obviously pressuring the market," one dealer said.
While the decline in prices inspired some scale-down buying, dealers said speculators remained unwilling to cover short positions and Vietnamese producers were still due to hedge a large chunk of their crop, leaving the market vulnerable to more selling.
March arabica coffee was down 1.85 cents, or 1.5 percent, to $1.2330 per lb after hitting a two-week low of $1.2260 cents.
The market was battered on Monday by speculative long liquidation after weaker-than-expected buying by index funds.
COCOA
March London cocoa was up 17 pounds, or 1.2 percent, at 1,388 pounds a tonne, supported by a weaker British pound.
March New York cocoa rose $4, or 0.2 percent, to $1,918 a tonne.
Focus remained on top grower Ivory Coast where strong port arrivals have boosted expectations for ample supplies.
Dealers were also awaiting grind data from Europe and North America, due out next week, for signs of demand.
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