Arabica coffee futures fell more than 4 percent on Friday, pressured by technical selling and weakness in top-grower Brazil's currency, while raw sugar also fell and cocoa edged higher. March arabica coffee settled down 4.75 cent, or 4.23 percent, at $1.0755 per lb, after dropping 4.5 percent to $1.0730, its lowest since Oct. 2. It is closing November down 7.8 percent from October.
"There's really not much news, this is more of a technical sell-off," said Boyd Cruel, senior market strategist at the Hightower Report. "The last day of the trading month, we're seeing long liquidation." Dealers said weakness in Brazil's real currency contributed to the decline along with an increasingly bearish technical outlook.
"Technical indicators suggest that prices will re-test support around 100 cents per lb over coming weeks," Fitch Solutions said in a report. The quality of Brazil's next coffee crop could be compromised by excessive flowering, which results in beans that lack uniformity at harvest time, an industry leader said.
March robusta coffee settled down $26, or 1.6 percent, at $1,599 per tonne, earlier sinking to $1,597, its lowest since Oct. 4. It will close the month down 4.5 percent. March raw sugar settled down 0.03 cent, or 0.2 percent, at 12.84 cents per lb, closing the month 2.7 percent lower.
Dealers said the market's Thursday run-up to a three-week high of 13.21 cents was largely fuelled by short-covering rather than supportive news. Weakness in crude oil prices continued to weigh on sugar, raising the possibility that Brazil ethanol production could become less attractive and more cane could be used to make sugar.
"This weekend may give some direction as the G20 meet in Buenos Aires. The US dollar, stock, bond and commodity markets are holding their collective breath," said Sucden Financial senior trader Nick Penney. The weaker Brazilian real currency also weighed on sugar prices, Judy Ganes, president of J. Ganes Consulting said.
March white sugar settled up $1.50, or 0.4 percent, at $348.20 per tonne, ending November down 2.1 percent. March New York cocoa settled up $38, or 1.8 percent, at $2,203 per tonne, earlier reaching $2,211, a 10-day high. It will close out November 2.2 percent lower.
March London cocoa settled up 16 pounds, or 1 percent, at 1,620 pounds per tonne, ending the month down 5.2 percent. Dealers said the expiry of December London cocoa options on Friday was the short-term focus.
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