LONDON: Raw sugar futures were lower on Monday with the market back on the defensive after last week's short covering rally, while arabica coffee turned lower after touching a 6-1/2 week high.
SUGAR
October raw sugar was off 0.25 cents or 1.8 percent at 14.05 cents per lb at 1419 GMT with the recent short-covering rally appearing to have run out of steam.
Dealers noted the recent rise in prices was likely to boost output in top producer Brazil, reinforcing the bearish fundamental backdrop.
"What this bounce has done is it's brought the sugar price away from ethanol returns," said one dealer. "In Brazil, the focus will continue to be on sugar. And it becomes more negative the longer the price is around these levels."
October white sugar was down $5.20, or 1.3 percent, at $393.80 a tonne.
ICE Futures Europe said on Monday that 199,050 tonnes of white sugar had been tendered against the August contract that expired on Friday.
COFFEE
September arabica coffee fell 0.50 cent, or 0.8 percent, to $1.3320 per lb after climbing to a 6-1/2 week high of $1.35.
Dealers said that despite broadly supportive fundamentals, price trends continued to be driven by speculators holding a large net short position.
"That's the only party in town really - the shorts," said one dealer. "Arabica is basically predicated on technicals and whether these guys buy or sell."
September robusta coffee was off $2 or 0.1 percent, at $2,144 per tonne.
COCOA
September New York cocoa was off $21, or 1.1 percent, at $1,894 a tonne.
Dealers said the market was back on the defensive after last week's rally which took prices from a low of $1,791 on Tuesday to a peak of $1,922 on Friday.
The rise had been partly driven by fund short covering but fundamentals remain bearish with a large global surplus widely seen in the current 2016/17 season.
A mix of healthy rainfall and sunny spells last week in most of Ivory Coast's cocoa regions spurred the growth of flowers and pods, boosting the prospects for a strong start to the upcoming main crop, farmers said on Monday.
September London cocoa fell 13 pounds, or 0.9 percent, to 1,496 pounds a tonne.
A total of 101,610 tonnes of cocoa has been tendered against the ICE July London cocoa contract that expired on Friday, exchange data showed on Monday.
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