Sugar, coffee and cocoa futures fell on Tuesday as they were pressured by renewed fears about the eurozone debt crisis and by perceptions investors will get a better return in other markets. Investors were increasingly edgy ahead of a finely balanced vote by Slovakia's parliament to ratify an expansion of the eurozone's rescue fund, the latest twist in Europe's financial debacle.
"You're seeing a rotation of money coming out of softs going back to the grains and energy markets," said Nick Gentile, head of trading for fund consultants Atlantic Capital Advisors in New Jersey. New York's March raw sugar contract fell 0.34 cent to end at 25.94 cents per lb. December white sugar futures on Liffe sank $11.60 to close at $668.50 a tonne. Dealers and analysts said the macroeconomic developments rather than fundamentals were driving the soft commodity futures markets. "Fundamentals have taken a back seat while the broader macroeconomic sledgehammer comes down," said a senior Western soft commodities analyst.
Sugar output from Brazil's centre-south cane region totalled 26 million tonnes since the start of the season through the end of September, down 4 percent from year ago levels. Sugar faces bumper cane crops in several northern hemisphere countries like India and Thailand. Cocoa is looking at huge crops in top producer Ivory Coast among others. New York's December cocoa contract dropped $52 or almost 2 percent to end at $2,604 a tonne. London's December cocoa contract lost 19 pounds to end at 1,688 pounds a tonne, having touched a contract low of 1,672 pounds.
Sugar prices could derive some support from floods in Thailand and an increase in cash inquiries as values fall. Arabica coffee futures fell in choppy two-way investor dealings, against a backdrop of tight global inventories. The market had fallen to a 10-month low last week as funds liquidated long positions amid the deepening debt crisis in the eurozone. Liffe robusta coffee futures risk falling due to expectations of a big crop in top producer Vietnam. New York's December arabica coffee futures declined 2.90 cents to finish at $2.234 per lb. London's January robusta coffee futures lost $64 or by 3.24 percent to close at $1,913 per tonne.