Raw sugar futures and arabica coffee on ICE slipped to the lowest level in more than two years in heavy volume on Wednesday, with both markets weighed down by surplus supplies, ignoring the firm commodity complex. Cocoa jumped as the spot contract trading on Liffe expired, with dealers anticipating a small delivery.
The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, was firm as the US greenback sank against a basket of major currencies, typically two supportive factors for the dollar-traded softs complex. As expected, the US Federal Reserve ramped up its monetary stimulus and took the unprecedented step in saying it would keep interest rates near zero until the jobless rate falls sharply.
Raw sugar eased to its lowest level in more than two years, with producers showing little sign of selling aggressively at current depressed levels and importers also sitting back after the recent slide. “I can’t see any rush on the importers side to purchase, as apart from Indonesia all the other big importers are well covered,” said Sergey Gudoshnikov, a senior economist with the London-based International Sugar Organisation. March raw sugar futures on ICE fell 0.34 cent, or 1.8 percent, to close at 18.54 cents a lb, the lowest settlement for the spot contract since August 2010.
The move increased the spot contract’s discount to the second position to around 0.16 cent per lb, the biggest since September 28, from about 0.14 cent on Tuesday. “They (trade) have got to push out the march spreads and get them wide enough so there’s going to be some sort of carry in the market,” said one US dealer.
Dealers and analysts noted that some importing countries recently took measures to protect their domestic markets. March white sugar on Liffe fell $8.00, or 1.6 percent, to end at $500.20 per tonne. March arabica coffee futures dropped 3 cents, or 2 percent, to finish at $1.4650 per lb, the lowest settlement for the second position since June 2010. “Everybody keeps pointing to the specs being so short in the market that that’s a reason for the market to turn around, but the specs are the ones that are making the money,” the US dealer said.
March robusta coffee futures inched up $6, or 0.3 percent, to settle at $1,890 a tonne. In cocoa, dealers eyed the expiry of Liffe’s December contract, which went off the board at around a 14 pound discount to March after trading at a premium as wide as over 80 pounds last week. March cocoa futures on Liffe rose 28 pounds, or 1.8 percent, to close at 1,547 pounds a tonne. Speculators have built up a large net long position in both the London and New York markets, which could support prices in the lead up to the end of the quarter as speculators attempt to their balance sheets.
On ICE, cocoa futures jumped with a lift from the firm sterling against the US dollar, with early short-covering pushing prices higher. The market extended gains after breaking above the session highs from the past two days, dealers said. March cocoa on ICE jumped $61, or 2.6 percent, to settle at $2,441 a tonne.