NEW YORK/LONDON: Raw sugar futures on ICE closed down on Tuesday, heading back towards the prior session’s two-month low after a short-lived rally, while arabica coffee prices also fell.
July raw sugar settled down 0.35 cent, or 2.1%, at 16.43 cents per lb. The front month slumped to a two-month low of 16.19 cents on Monday.
Dealers said the market was back on the defensive after rallying sharply late on Monday, with funds currently scaling back long positions in the sweetener.
They noted July’s discount to October was widening in the run-up to its expiry next week, a sign there is little appetite to receive sugar given demand remains weak.
A large Brazilian mill said it plans to change its production strategy this season to increase ethanol and cut sugar production.
August white sugar fell $7.00, or 1.6%, at $418.70 a tonne.
September arabica coffee closed 1.95 cent down, or 1.3%, at $1.521 per lb, slipping back towards a one-month low of $1.4905 set on Monday.
Dealers said an improved outlook for next year’s crop in Brazil following recent rains had weighed on prices, although a drop in production this year, an off-year in the country’s biennial crop cycle, helped to underpin prices.
“We expect the recent rainfall over Brazil major arabica growing regions to weigh on coffee prices as the weaker outlook for the current crop year has largely been priced in,” fund manager Wisdom Tree said in a report.
Trader Comexim said in a note to clients that the Brazilian spot market has been slow due to recent weakening in New York and a stronger local currency.
September robusta coffee settled down $20, or 1.2%, at $1,597 a tonne.
September New York cocoa settled up $18, or 0.8%, to $2,396 a tonne.
September London cocoa rose 10 pounds, or 0.6%, to 1,630 pounds per tonne.
The world’s top two cocoa producers Ivory Coast and Ghana threatened on Monday to name and shame top chocolate brands they say are undermining a scheme aimed at paying cocoa farmers a living income.