Arabica coffee futures on ICE crumbled on Friday, posting their biggest drop in more than a year as the deepening eurozone debt crisis sparked losses across the commodities markets. Cocoa futures on ICE extended their losses, falling more than 7 percent since Monday in their biggest four-day decline in four months, ending at a one-month low on follow-through selling.
Sugar finished mixed. Arabica coffee futures were hit by a downside correction this week following a sustained advance, which saw prices climb last week to the highest level since May 9. "I don't think it's necessarily a bearishness for coffee as it is a deep sense of macro nervousness seems to be creeping into the markets," said Sterling Smith, analyst for Country Hedging in Minnesota.
December arabica coffee on ICE sank 14.10 cent, or 5 percent, to close at $2.70 per lb, the weakest finish since August 22. Intraday, the contract fell through the 100-day moving average around $2.6920 to a session low of $2.6510. Arabica coffee's open interest soared to a three-month high of more than 115,000 lots by September 8, while prices dropped as new shorts entered the market, dealers said.
Another bearish factor is heavy put buying of as far out as November 2012 around the $2.50-$2.60 level, which weighed on the market, Smith said. Robusta coffee futures on Liffe eased with November closing down $48, or 2.2 percent, at $2,171 a tonne. Cocoa futures on ICE also took a hit as the dollar strengthened while the sterling-denominated Liffe contract closed down a shade. December futures on ICE dropped $38, or 1.3 percent, to finish at $2,873 a tonne, the weakest finish since August 10, with dealers noting the market was still weighed down by a large global surplus in 2010/11 which has been widely estimated at more than 300,000 tonnes.
December cocoa futures on Liffe finished down 5 pounds at 1,856 pounds a tonne. Raw sugar futures on ICE were mixed with the key spot contract ending firm, gathering momentum when key levels were breached, and on renewed buying in the front month spreads in both New York and the whites market in London. October raws rose 0.32 cent, or 1.1 percent, to end at 29.05 cents per lb after peaking at 29.43 cents, while the rest of the board was mixed. October whites on Liffe finished flat at $763.00 per tonne.