Cocoa slips as technical support fades, sugar also falls

LONDON: Cocoa futures fell on Wednesday amid weaker technicals and enduring worries about ample supplies, while raw sugar fell as bearish chart signals weighed on prices.

COCOA

May New York cocoa had lost $29, or 1.36 percent, to $2,100 a tonne by 1113 GMT in low volume, while May London cocoa was down 18 pounds, or 1.05 percent, at 1,690 pounds a tonne.

Dealers noted technicals were weaker, after both markets lost ground in the previous session and closed below the short-term moving averages.

Currency also pressured the New York contract, as the dollar rose on expectations for more US rate hikes this year.

The fundamental backdrop remained bearish, with expectations for a global surplus this season.

"For the mainstay, it seems to be that we have a sizeable surplus," one dealer said. "I think people are trying to digest what is going to be the next move. But I would say overall the bears are still arguably in control."

Ghana's cocoa industry regulator said the world's second-largest producer had spent the $1.8 billion loan it procured to purchase cocoa for the 2016/17 season and must seek fresh funds to make purchases for the rest of the season.

Indonesia will lower export taxes on the cocoa exports in April as reference prices are seen falling below certain thresholds, the trade ministry said on Wednesday.

SUGAR

May raw sugar was down 0.23 cents, or 1.31 percent, at 17.33 cents a lb.

Prices were pressured by a weak close in the prior session, after an early speculative rally ran out of steam.

The market was monitoring the damage done by Cyclone Debbie, which hit Australia's cane growing regions on Tuesday, although the damage to output could take weeks to assess.

"Some cane will obviously be damaged to an extent that it will not recover. Much more cane though may or may not recover from lodging or extremely wet conditions," said Tobin Gorey of the Commonwealth Bank of Australia. "Nevertheless, the overall damage is potentially material in global sugar terms."

May white sugar also fell $5.40, or 1.09 percent, to $489.90 a tonne.

COFFEE

May arabica coffee fell 0.60 cent, or 0.42 percent, to $1.406 per lb.

May robusta also fell $13, or 0.60 percent, to $2,155 a tonne.