Cocoa falls further

Cocoa futures extended losses on Thursday as investors liquidated long positions and opened new short positions, while sugar consolidated up a shade and coffee moved lower. ICE cocoa futures fell in thin, holiday dealings between Christmas and the New Year, pressured by abundant nearby West African supplies.
"The shorts are doing their best to regain control of it, and doing a pretty good job the way they knocked it down about $80 yesterday and $50 today," said Drew Geraghty, commodity broker for ICAP North America in Jersey City, New Jersey. "Everybody's risk tolerance at this time of the year is a little tighter and everybody's getting tired of getting chopped up in the market. People are keeping their stops closer to their vest." ICE March cocoa settled down $50, or 2.3 percent, at $2,083 per tonne. The market is on track to finish 2011 down 31 percent as the second-worst performer on the Thomson Reuters-Jefferies CRB index, and the commodity's biggest annual decline since 1999.
London March cocoa finished down 26 pounds, or 1.9 percent, at 1,364 pounds per tonne.
"I don't see a lot of downside (price) risk because industry buying in the first quarter of 2012 should be supportive," said Keith Flury, a senior soft commodities analyst with Rabobank. ICE raw sugar futures firmed on light investor buying and book-squaring, consolidating after Wednesday's three-week peak The market was also pressured by big crops in the EU, Russia, Ukraine, India and Thailand.
Dealers said the market was anticipating that index funds would increase weightings of sugar to take advantage of this year's price slide. "We had seen a pretty decent rally in sugar based on the view that the index fund rebalancing will support the market," said Flury. ICE March raw sugar futures finished up 0.38 cent, or 1.6 percent, at 23.51 cents a lb.
"We got up to 24 cents yesterday and then fell apart. It's consolidating. Most of the people (in the sugar trade) are already celebrating New Year," said Alex Oliveira, senior sugar analyst for brokerage Newedge USA in New York. London March white sugar futures gained $5.50, or 0.9 percent, to close at $604.60 per tonne.
Arabica coffee futures on ICE dipped with pressure from the strong US dollar, before the dollar pared gains. "Coffee had a really good rally yesterday so it's giving back some of that here today," Geraghty said. ICE March arabica futures closed down 2.50 cents, or 1.1 percent, to finish at $2.2425 per lb. London March robusta coffee futures settled down $11 at $1,807 per tonne, trading above Wednesday's two-week low of $1,792 per tonne, basis second month, pressured by a big crop in top producer Vietnam.