Coffee and sugar futures fell on Monday, weighed upon by broad-based losses in commodity markets as investors became more averse to risk in the aftermath of Japan's catastrophic earthquake and tsunami. Cocoa futures on ICE joined the downward trend after bucking it for most of the session on concern about the violent conflict in top-grower Ivory Coast and on uncertainty a day before the country's export ban was scheduled to end.
The strong pound against the dollar put Liffe cocoa in negative territory. Dealers said the market remained underpinned by tight supplies which helped to drive prices for the second month to a 34-year high of $2.9665 per lb. Costa saw key support for May at $2.6210.
"Globally, stocks are at their lowest since over a decade, as producers have had to draw down on origin stocks to meet export obligations following consecutive poor harvests," Macquarie Bank said in a commodities report. May robusta coffee on Liffe fell $31 to $2,390 a tonne.
Cocoa prices were higher, supported by continuing conflict in Ivory Coast while the export ban there, imposed by presidential claimant Alassane Ouattara and widely followed, is scheduled to expire Tuesday. The last time it was set for expiry, Ouattara extended it.
"There's increased uncertainty about what will happen tomorrow when the export ban is set for expiration," said Erica Rannestad, commodity analyst with CPM Group. "Investors are expecting some potentially confusing announcements tomorrow because shippers aren't sure with what they should do or could do."
Dozens of people left a district of Ivory Coast's commercial capital on Sunday after gun battles, and Ouattara made it back from an African Union summit, despite concerns about his security. "The growing uncertainty is raising the risks for the supply-side - not just for the mid crop due next month, but for the 2011/12 main crop and longer term too," Macquarie Bank said.
May cocoa on Liffe cocoa dropped 42 pounds to close at 2,184 pounds a tonne. Sugar prices were also swept lower as other commodity markets declined. Dealers said talk of possible demand destruction following a climb the highest prices in three decades last month also weighed on sentiment.
Dealers continued to eye prospects for exports from India, the world's second largest producer and top consumer. "India's sugar industry is eager to export more on the back of a large oversupply and low domestic prices and sees scope for this of up to 2 million tons of sugar," Commerzbank said in a Monday market note. Liffe sugar fell $13.20 to settle at $706.80 per tonne.