Sugar and coffee futures were mixed Wednesday while cocoa stumbled as the softs complex struggled to find its footing in a volatile environment. Renewed risk aversion flared as it was linked to rumours of a possible downgrade in France's credit rating which in turn sparked selling across a wide range of commodity and other financial markets.
Global stocks slumped as the appetite for risk evaporated in an investment climate rife with uncertainty. Sugar pared its initial losses, with a small Brazilian crop providing support and the market looking to release of industry group Unica's crop update on Thursday. But macro economic factors have trumped bullish developments at this time.
"Sugar is still well supported fundamentally but I think it has become a victim of the broader market volatility," said Andrey Kryuchenkov of fund VTB Capital. The key October raw sugar contract rose 0.13 cent to close at 27.62 cents per lb. US cocoa eased as September/December spreading in heavy volume continued ahead of the spot contract's first notice day next week and as nearby supplies remained plentiful, dealers said.
Meager rains and overcast weather last week in Ivory Coast's cocoa growing regions were generally bad for the development of the forthcoming 2011/12 main cocoa crop, farmers said on Tuesday. "Supplies are weighing on prices for this year but a tighter scenario is being drafted for the coming season," Natixis analyst Paez Cortez said.
ICE Futures US December cocoa contract lost $72 or by 2.4 percent to end at $2,871 a tonne. Arabica coffee futures moved higher on September/December spreading ahead of the September contract's first notice day August 23. "Certified stocks keep on dropping and people have been starting to notice that," Scoville said, about another factor helping to lift arabica futures. The December arabica coffee contract slipped 0.15 cent to finish at $2.3835 a lb.