LONDON: Raw sugar futures on ICE plunged on Monday as lacklustre buying interest from index funds triggered speculative long liquidation, while arabica coffee also fell.
SUGAR
March raw sugar was down 0.40 cent, or 2.7 percent, at 14.68 cents per lb by 1452 GMT, having earlier tumbled nearly 3.6 percent to 14.54 cents.
Dealers pegged the decline on speculative long liquidation, after weaker-than-expected buying interest from index funds as they officially began to rebalance on Monday.
The market had widely expected index funds to buy some 60,000 lots of sugar after its poor performance in 2017.
But dealers said on Monday the volume could be more conservative and index funds may have already purchased the bulk ahead of the official rebalancing period.
"The much-heralded index fund buying is failing to materialise, maybe because it's already been done," one dealer said. "A lot of people got long ahead of it ... So those people panic and start selling."
March white sugar fell $9.10, or 2.3 percent, to $387.60 a tonne, with dealers pointing to hedging by Thai producers as one factor.
"They have been very slow to price," the dealer said. "It's possible that they have started to pick up the pace today."
COFFEE
March arabica coffee was down 2.35 cents, or 1.8 percent, at $1.2610 per lb after hitting a session low of $1.2520.
Index fund buying also seemed weak in that market, dealers said, which dampened sentiment and led to long liquidation.
March robusta coffee fell $18, or 1 percent, to $1,706 a tonne, with dealers saying the market was vulnerable to producer selling from Vietnam.
"Vietnam has a lot to fix but the funds have an appetite to short the market," the dealer said. "And industry doesn't want to support prices right now."
COCOA
March London cocoa was down 10 pounds, or 0.7 percent, at 1,354 pounds a tonne after slipping to 1,346 pounds.
Ivory Coast's CCC marketing board resold in late December 100,000 tonnes of cocoa export contracts that were headed for default, a senior CCC official and exporters said.
Exporters on Monday estimated 78,000 tonnes of cocoa were delivered to ports in Ivory Coast between Jan. 1 and Jan. 7, up from 67,000 tonnes in the same period last season.
March New York cocoa fell $7, or 0.4 percent, to $1,888 a tonne.
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