London cocoa at two-year low

Soft commodity markets were pummelled across the board on Wednesday after a spike in Italian bond yields shoved the dollar up as the ripples from Europe's debilitating debt crisis deflated the complex. London cocoa values dove to their lowest in over two years, with bumper supplies from the main West African growing region underlining a poor fundamental outlook in the market.
Stocks and the euro sold off Wednesday as Italian borrowing costs reached a breaking point and investors feared the eurozone's third largest economy could be facing a debt crisis similar to that, which hamstrung Greece. London's December cocoa futures slid to a lifetime low of 1,629 pounds a tonne, its lowest intra-day level since early July 2009 and fell 40 pounds or 2.4 percent to finish at 1,633 pounds per tonne.
The March cocoa contract on ICE Futures US slid $86 or 3.2 percent to finish at $2,603 per tonne. New York's March raw sugar contract fell 0.55 cent or 2.12 percent, to settle at 25.36 cents a lb. London's December white sugar futures fell $8.30 to close at $677.50 a tonne.
"The reason we have blood on the street is because of the Italian bond yields soaring, which is pushing the dollar higher and this is putting pressure on commodities," said Country Hedging Inc senior analyst Sterling Smith. "Sugar, along with all commodities, is lower today due to a stronger dollar which in itself is due to a weak euro. It's all linked to the Italian fiasco, which is causing weakness across the board," added James Kirkup, head of sugar brokerage at ABN Amro Markets (UK) Ltd.
Cocoa's losses were aggravated by the already bearish fundamentals in the market, with news that bean arrivals at ports in Ivory Coast are picking up after a sluggish start to the season, exporters said earlier this week. US cocoa futures were also weighed down by heavy position rolling out of the December contract, which continued to be a top feature of the market. "The markets have possibly been encouraged by the bounce off yesterday's lows, but is also seems that they will struggle to make headway in these uncertain macro conditions," Nick Penney of Sucden Financial said in a market note. New York's December arabica coffee futures rose 0.60 cent to close at $2.302 a lb. London's January robusta shed $8 to end at $1,836 per tonne.