Sugar and coffee futures careened lower on Tuesday while cocoa was mixed as investors in soft commodities remained uncertain about the debt crisis in Europe and the United States. London's October white sugar futures dipped 10 cents to trade at $753 a tonne.
A eurozone summit on Thursday may complete a second bailout of Greece, while the United States faces an August 2 deadline when Washington must raise its debt ceiling or the world's biggest economy goes into default. Sugar has enjoyed some support from cuts in estimates of cane production in No. 1 grower Brazil's key centre-south although this factor may have already been priced into the market.
Barclays Capital said: "In the short term, we expect sugar prices to be well supported as, while the market is still expecting a return to surplus, recent concerns about the Brazilian crop on ageing cane and low sucrose content has seen continued mark-downs in supply estimates." Other analysts disagreed. Jeremy Gatto, head of trading at commodities hedge fund Tiberius Asset Management, said it was difficult to see sugar remaining at these elevated prices with support limited to trend-following funds buying the market.
Coffee futures lost ground as well, as investors sales pummelled both arabica and robusta prices.
Liffe September robusta futures lost $68 to trade at $2,182 a tonne. The trade digested news that coffee exports from Indonesia could fall more than 30 percent to 300,000 tonnes in 2011 as supply constraints lead to tight stocks at the end of the year, a senior industry official said on Tuesday.
Indonesia is the only major coffee producer to see a fall in 2010/11 production. Cocoa futures crawled up although analysts believe US bean futures were overbought and may be due for a setback. London's September cocoa contract shed 7 pounds to finish at 1,994 pounds per tonne.