Cocoa futures dropped to three-week lows on Wednesday as profit-taking kicked in after investor buying dried up, while raw sugar edged down to close also at its weakest level in three weeks. Coffee declined slightly amid a lack of new fundamentals.
March cocoa on ICE closed down $66, or 2.9 percent, at $2,225 a tonne, its lowest settlement since January 9. Liffe May cocoa futures fell 51 pounds, or 3.4 percent, to end at 1,460 pounds a tonne, also the weakest finish since January 9.
Ivory Coast conducted a second day of auctions to forward-sell cocoa, but a number of leading export companies continued their boycott in protest over what they see as a lack of clarity in the top grower's overhaul of its sector.
"You've got the government saying the auction's going well and the exporters boycotting. But you still have people looking at both sides of the news and trading on both sides of the news," said Hector Galvan, senior market strategist for brokerage RJO Futures in Chicago.
"The thing that took it lower is the significant speculative profit-taking and (sell) stops being hit." Kona Haque, an analyst with Macquarie Bank, said: "We're going to have to wait for the auctions to gather momentum."
Ivory Coast held two auctions of the 2012/13 crop this week, the first step in a move away from a decade of liberalisation back to a price-regulated sector aimed at guaranteeing its farmers a price floor.
March raw sugar futures on ICE fell 0.05 cent, or 0.2 percent, to settle at 23.59 cents a lb, the lowest since January 12 for the second straight day.
"The recent price rally in sugar did attract selling from origin. We're seeing a renewed focus on the fundamentals," Haque said, referring to a global surplus of the sweetener.
"The biggest uncertainty is the Brazilian crop outlook."
Macquarie Bank sees 2012/13 cane output in the center-south of Brazil at around 520 million tonnes, up about 5.5 percent from 493 million in 2011/12, a director said.
The ICE raw sugar market was focused on the expiry of the March contract on February 29, and the nearby price risk appeared to be on the downside, said Peter De Klerk, analyst with London-based merchant Czarnikow.
"We've seen the market challenge the 25-cent area recently. We've retreated from there and we find that we're probably on the downward trend at the moment," he said.
London March white sugar futures lost 50 cents to settle at $629.70 per tonne.
China's sugar areas in major producing regions increased 7.9 percent in the current crop year from a year earlier, the Yunnan Sugar Website reported, citing the Ministry of Agriculture.
Arabica coffee prices on ICE ignored a weak US dollar and inched down.
"There's nothing here pushing the market one way or the other," Galvan said, noting a lack of market-moving fundamentals.
ICE March arabicas closed down 0.95 cent, or 0.4 percent, at $2.1410 per lb, the weakest settlement since December 16.
"Arabicas managed to breach the $2.18 level, which opens potential for further declines to the $2.05 level basis second-month continuation charts," said Myrto Sokou, an analyst at brokerage Sucden Financial.
March robusta coffee on Liffe finished down $17, or 0.9 percent, at $1,819 a tonne.