Cocoa futures on ICE fell sharply in heavy volume for the second straight session on Tuesday, dropping to the lowest since October as speculators continued their selling spree, while raw sugar fell nearly 3 percent. Coffee prices also eased amid a second day of general weakness among commodities as the US dollar strengthened and oil prices dropped on concerns about the pace of economic growth in China.
ICE March New York cocoa settled down $65, or 2.1 percent, at $3,059 per tonne, after touching a three-month low at $3,051 and marking its biggest two-day tumble since October 2014. Additional pressure came from the sterling, which fell to a nine-month low against the dollar. Total volume was double the average for the second straight day. "It's specs liquidating," one US trader said, adding that system speculators sold as futures fell below key moving averages.
"The arrivals are coming in a bit stronger than people thought and you saw the December/March spread weaken." The December/March spread fell to a $2 discount, the smallest since August but a sharp move from a $5 premium just two session's prior. Speculators have been liquidating their hugely bullish position for weeks. London March cocoa settled down 46 pounds, or 2.1 percent, at 2,163 pounds per tonne, the lowest since late-October and its biggest two-day drop since December 2014.
Raw sugar futures took a tumble late in the session, triggering sell-stops below the recent session lows and moving averages, traders said. March raw sugar settled down 0.4 cent, or 2.7 percent, at 14.57 cents per lb. The market ignored eroding prospects for exports from India, the world's second largest producer, where domestic prices were on the rise.
Traders said sugar prices were also pressured by the firm US dollar and weak oil prices. ICE March white sugar settled down $6.5, or 1.6 percent, at $412.70 per tonne. The spot white/raw premium jumped to the highest since mid-September around $91 per tonne. Arabica coffee prices for the second straight day as the market lacked any strong fundamentals to take it out of the range that they have held for nearly three months. ICE March arabica coffee settled down 0.9 cent, or 0.7 percent, at $1.23 per lb. ICE March robusta coffee settled down $21, or 1.4 percent, at $1,507 per tonne, weighed down by arabicas and ample supplies from the harvest in top grower Vietnam.