Soft commodity futures largely weaker

Soft commodity futures ended Friday largely weaker in a holiday-shortened session as the European debt zone crisis continued to exact a toll on global commodity and financial markets. US cocoa beans sank to a 2-1/2 year low and was down for the fourth straight week as ample supplies, the strong dollar and the impact of the harvest in West Africa depressed markets in New York and London. Sugar was also pressured by news of big supplies and Indian exports.
Commodity markets were shut on Thursday for the US Thanksgiving holiday. "Markets have been tumbling not just on macro uncertainty or the stronger US dollar but also on deteriorating fundamentals," Macquarie Bank said in a commodities note, referring particularly to sugar and cocoa.
"There are plenty of supplies in sugar and cocoa," added The Price Group senior analyst Jack Scoville. "We are recovering with the stocks, although cocoa is at harvest." Volumes though were light. Trading in New York soft commodities ranged from nearly a third to over three quarters under the 30-day norm, Thomson Reuters data showed. March cocoa on ICE fell $23 to end at $2,381 a tonne, the lowest settlement for the second position contract since May 2009. London March cocoa futures lost 9 pounds to finish at 1,536 pounds a tonne.
Macquarie Bank estimated global cocoa grindings growth, a key indicator of cocoa consumption, slowing to 2.6 percent this season, from 3.9 percent in 2010/11. "This implies our global supply/demand balance now points to a modest surplus for 2011/12 - the second in a row," it said.
Sugar futures, on the other hand, were pressured by news that India, the world's No. 2 producer of the sweetener, would be exporting 1.0 million tonnes of sugar and may be poised to export a total of 4.0 million tonnes. Dealers said bumper northern hemisphere crops were weighing on the sugar market with large output expected from producers including Russia and France.
ICE March raw sugar futures dropped 0.19 cent to close at 22.90 cents a lb. London's March white sugar futures on Liffe fell $4.40 to finish at $598.20 a tonne. "Sugar prices will likely continue to weaken until Q2 2012, after which point it has the potential to outperform the other softs on the back of bullish Brazilian supply-side issues," Macquarie said.
Coffee futures were mixed, with London robustas eking out small gains while arabicas were pressured by the weak macro environment in holiday-thinned business. New York's March arabica coffee contract lost 2.85 cents to close at $2.3255 a lb. London's January robusta contract added $5 to close at $1,928 a tonne.