Raw sugar futures on ICE fell to a seven-week low on Friday, while cocoa prices were sharply down as concern about the spread of the coronavirus sparked widespread losses in crude oil and other commodity markets. May raw sugar was down 0.26 cents, or 1.8%, at 13.94 cents per lb by 1529 GMT, after sliding to a seven-week low of 13.88 cents.
The International Sugar Organization of Friday forecast a deficit of 9.44 million tonnes in the 2019/20 season, the largest deficit in 11 years. Dealers said the expiry of the March contract later on Friday was also providing a major short-term focus. The open interest on the March contract has been falling steadily in the run-up to expiry and stood at 19,375 lots as of February 27, down 10,071 lots from a day earlier.
May white sugar fell $6.30, or 1.6%, to $392.40 a tonne, having hit a one-month low of $392.10. May New York cocoa was down $89, or 3.2%, at $2,656 a tonne, after setting a six-week low of $2,646. May London cocoa fell 49 pounds, or 2.5%, to 1,938 pounds a tonne.
May arabica coffee rose 2.25 cents, or 2.05%, to $1.12 per lb, boosted partly by short-term supply tightness in the physical market. May robusta coffee was down $5, or 0.4%, at $1,284 per tonne. Dealers noted the recent sharp decline in crude oil prices could also encouraged mills in Brazil to switch to use more cane to produce sugar rather than biofuel ethanol.
"Lower oil prices are lowering prospective ethanol parity. The New York May (raws contract) has now fallen enough that it is in danger of triggering momentum investors to sell their heavy long position," Commonwealth Bank of Australia analyst Tobin Gorey said.