Raw sugar sinks, robusta jumps briefly

Raw sugar futures on ICE sank more than 4 percent on Monday, their biggest tumble in two months, on the strong US dollar, abundant supplies and in reaction to a sharp reduction in speculators' bearish position. Robusta coffee futures were firm but sharply pared gains after buy orders were triggered and a one-minute surge lifted prices 3 percent. Arabica was quietly lower while cocoa prices were little changed.
The broader commodity complex fell for the fourth straight session to a 3-1/2-month low as the greenback rose to a three-month high, with traders building bets that the US Federal Reserve would raise interest rates later this year. Raw sugar futures fell for the fourth straight session pressured by a mountain of bearish factors including the strong dollar, lack of physical sales, large inventories in India and Thailand, and data on Friday that showed a huge cut in speculators' net short position that nearly wiped out their bearish stance.
"The Commitments of Traders report sent the market lower from the word 'go'," said James Kirkup, head of sugar brokerage at ABN Amro in London. October raw sugar slumped 0.52 cent, or 4.3 percent, to settle at 11.44 cents a lb, in heavy volume, the biggest drop since May 13. October whites eased $9.50, or 2.7 percent, to end at $347.90 a tonne.
The weakness in Brazil's real also boosted incentives for Brazilian producers to sell dollar-denominated sugar and boost returns in the local currency. In coffee, the benchmark robusta contract jumped 3 percent within one minute after buy stops were hit, triggering a flurry of trades and perplexing traders. The contract saw even heavier volume in the following minute as prices quickly pared gains, with 20 percent of its full session's volume having traded within those two minutes. September robusta settled up just $3, or 0.2 percent, at $1,678 a tonne, after surging to $1,730.
September arabicas eased 0.95 cent, or 0.7 percent, to close at $1.2745 per lb. "There are no nearby bullish arguments for robusta and arabica," one coffee dealer said, referring to plentiful overall availability of coffee. December London cocoa ended up 4 pounds, or 0.2 percent, at 2,218 pounds a tonne, while September New York cocoa closed up $7, or 0.2 percent, at $3,353 a tonne. Both contracts remained within sight of their highest levels since March 2011, reached last week after rising on speculative buying and concerns over the potential production impact of El Nino.