New York cocoa futures on ICE extended losses in heavy volume on Wednesday, falling below $3,000 per tonne for the first time in eight months in their biggest three-day slump in more than a year as speculators sold amid a weak macroeconomic picture. Raw sugar fell for the third straight day, under pressure from a firm dollar and chart-based sell signals, while white sugar surged on tight nearby supplies, taking the processed sweetener's premium over raws to a contract high above $100 per tonne.
Arabica coffee slid almost 3 percent amid a third day of general weakness among commodities, which dropped to the lowest in 13-1/2 years as China fuelled fears above its economy. March New York cocoa settled down $78, or 2.6 percent, at $2,981 per tonne, after touching the lowest since May 2015 at $2,971. Additional pressure came from sterling, which extended losses to a nine-month low against the dollar.
New York cocoa has fallen more than 7 percent in the past three sessions as heavy speculative selling has been met by heavy industrial buying, boosting volume to more than double the average every day this week so far, traders said. Speculators have been liquidating their hugely bullish position for weeks but the New York cocoa market's relatively steady open interest the past two sessions has surprised traders, give the sharp downside move. Total open interest fell less than 1,500 lots on Monday and Tuesday, when prices sank 4.7 percent, exchange data showed.
"High bean arrivals in (top cocoa grower) Ivory Coast during the holiday period surprised the market a little bit," one London-based broker said. London March cocoa settled down 48 pounds, or 2.2 percent, at 2,115 pounds per tonne, after touching 2,111 pounds, the lowest since late October. March raw sugar settled down 0.15 cent, or 1 percent, at 14.42 cents per lb, while March white sugar settled up $6.5, or 1.6 percent, at $419.20 per tonne.
Traders said sugar was pressured by lower oil prices and the weak Brazilian real, but that losses were capped as the rally in white sugar will increase demand from raws as margins improve. "The structure in both markets suggests tightness ahead," said Nick Penney, senior trader with Sucden Financial Sugar. "We expect the trend to resume upwards." March arabica coffee settled down 3.05 cent, or 2.5 percent, at $1.1995 per lb.
March robusta coffee settled down $15, or 1 percent, at $1,492 per tonne.
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