NEW YORK/LONDON: Raw sugar futures slid to a fresh 5-1/2-month low on Wednesday as bumper Indian supplies, surplus stocks and an increasingly sour economic outlook deflated the sweetener.
Coffee and cocoa were mixed as most players remained glum on the poor macro picture. US markets will be shut Thursday for the US Thanksgiving holiday with trading resuming Friday for a shortened session.
Dealers said the latest trigger was one of Germany's worst bond sales since the launch of the euro, which fanned concerns the debt crisis may even start to threaten Berlin. The result helped to send world stocks to a six-week low.
"It remains gloomy as European concerns and bearish fundamentals in some commodities, such as sugar and cocoa, continue to weigh on prices," said Country Hedging Inc senior analyst Sterling Smith.
"We've had bad news concerning the German auction this morning...Commodities are very correlated with equities at the moment," Romain Lathiere, fund manager with Diapason Commodities Management, said.
ICE March raw sugar futures dropped 0.35 cent, or 1.5 percent, to close at 23.09 cents a lb, after falling to a 5-1/2 month low at 23.01 cents.
London's March white sugar futures on Liffe fell $8.50 to end at $605.40 a tonne.
Analysts said definite news on Indian sugar exports and upward revisions in Brazil's crop kept the sweetener on the defensive.
"I am pretty sure it is nearly the end of the downtrend on sugar, around 22 cents that would be the bottom but it (the fall) is more related to macro than commodity news," Lathiere said, noting ongoing production issues in top grower Brazil.
Smith said it would not be out of the question to see sugar prices tumble further. "Sugar below 20 (cents/lb) is conceivable," he said.
COFFEE AND COCOA MIXED
Coffee futures were mixed, with arabicas succumbing to macro economic pressure late in the session.
A recent forecast for that production in Colombia, the world's biggest producer of washed arabica beans, will fall to 8 million bags this year, provided some bullish sentiment to the market, dealers said.
The benchmark March arabica coffee contract has dealt in a range between $2.24-$2.55 per lb in the past month.
New York's March arabica coffee contract lost 1.50 cents to finish at $2.354 a lb. EST. London's January robusta contract added $24 to end at $1,924 a tonne.
The market was in a sideways trading pattern, said Nick Gentile, head of trading operations in commodity fund Atlantic Capital Advisors in New Jersey.
"You'll see people selling coffee around $2.40-$2.43 and you'll see buyers anywhere from $2.30-$2.24. If you're a technical trader right now you're probably trading from a long side (rather) than a short side by the way the chart looks."
A London-based brokers said the physical coffee market "is fairly quiet; in robustas because we're just before the Vietnamese crop, while Brazilian beans are at a premium to the New York market and no one wants to pay that, and Centrals aren't ready yet."
Harvest in Central America is typically from November to February and the region produces mostly arabica beans.
Cocoa was mixed, with the ongoing harvest in West Africa keeping gains in bean values capped.
March cocoa on ICE lost $17 to end at $2,404 a tonne, with the session low at $2,398 barely above the Tuesday low of $2,395, which was the lowest for the second month since May 2009. London March cocoa futures rose 4 pounds to finish at 1,544 pounds a tonne.
"Cocoa's down because we're in the flush of the harvest now. There's no deficit and there's talk about no deficit next year. Demand has not increased. We're basically oversupplied with beans," Gentile said.
US cocoa futures dealt in an inside day, consolidating after tapping a 2-1/2-year low on Tuesday and then making a key reversal higher. The market felt pressure from the weak macro scene along with the lower commodity complex, dealers said.
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