Raw sugar sinks, London cocoa at seven-month trough

Raw sugar futures on ICE fell more than 2 percent to a one-month low on Wednesday, on expectations for abundant global supplies, while London cocoa futures inched down to a seven-month low amid worries about contract defaults in the Ivory Coast. Soft commodity prices were partly pressured by the weak 19-market Thomson Reuters CoreCommodity Index, which fell roughly 3 percent this week so far.
March raw sugar settled down 0.45 cent, or 3 percent, at 14.45 cents per lb in heavy volume, the lowest since November 7 and the biggest one-day drop since late September. "We're probably seeing some of the weaker longs get out and I think that overall, the (global) harvest looks really good," one US trader said.
Indian sugar mill production has so far jumped sharply year-over-year, according to the Indian Sugar Mills Association, while output in the European Union and exports from Pakistan were also expected to be strong. March white sugar settled down $7.70, or 2 percent, at $375.30 per tonne, a one-month low.
March London cocoa settled down 16 pounds, or 1.1 percent, at 1,408 pounds per tonne, after falling to its weakest since May 4 at 1,405 pounds. It fell to around 22 on the 14-day relative strength index (RSI), the most technically oversold level since April. March New York cocoa settled down $26, or 1.4 percent, at $1,906 per tonne, a three-month low. This took it to around 30 on the RSI, also the lowest since April.
Dealers said concerns that exporters in top grower Ivory Coast could again be vulnerable to defaults attracted speculative selling, though the country's Coffee and Cocoa Council (CCC) later dismissed the concerns as "unfounded rumours". "Around this time last year, suddenly there was a realization there may be a lot of unhedged cocoa," said one dealer. "Now there's a very strong suspicion that the same thing has happened again."
Also in Ivory Coast, a spokesman said the government is in talks with Hershey over the construction of a cocoa factory. March arabica coffee settled down 1.3 cents, or 1 percent, at $1.261 per lb, falling for the third straight day. The drop came after total open interest fell for the 21st straight session, reaching 191,144 lots on Tuesday, exchange data showed. Dealers said the market was pressured by a lack of industry buying against a backdrop of persistent selling by Brazilian producers. January robusta coffee settled up $1, or 0.06 percent, at $1,758 per tonne.