Coffee and sugar slide as Brazil currency extends decline

LONDON: Arabica coffee and raw sugar futures were sharply lower on Friday, with the weakness of Brazil's real currency helping to keep both markets on the defensive.

Brazil's currency slumped further on Friday, hit by a welter of bearish economic forecasts, fragmented domestic politics and deepening uncertainty over the government's ability to get its flagship pension reform bill through Congress any time soon.

A weaker real boosts returns in local currency terms for dollar-denominated commodities and can, therefore, encourage producer selling.

COFFEE

* July arabica coffee futures were 2.15 cents, or 2.35%, lower at 89.50 cents per lb by 1443 GMT.

* "The (Brazilian) real is a driver on this (decline)," one dealer said, adding that there is still scope for funds to add further to a net short position.

* Dealers said supplies remained ample after a record Brazilian crop last year, though a smaller harvest is expected in 2019, an off-year in the country's biennial crop cycle.

* "If you try to find a bullish argument, you will struggle," the dealer added, noting that the deteriorating economic outlook in Brazil could spark further weakness in the currency.

* July robusta coffee fell by $40, or 3%, to $1,295 a tonne.

SUGAR

* July raw sugar dropped by 0.29 cents, or 2.5%, to 11.49 cents per lb.

* Dealers said weekly Commitments of Traders data was expected to show an increase in the size of the speculative net short position.

* August white sugar was down $6.20, or 1.9%, at $319.40 a tonne.

COCOA

* July London cocoa fell by 16 pounds, or 0.9%, to 1,727 pounds a tonne.

* Dealers said the market continued to keep a close watch on July's premium to September for evidence of any tightness in deliverable supplies.

* July New York cocoa was down $18, or 0.8%, at $2,354 a tonne.