Sugar price sinks to 2010 low; cocoa, coffee hit by profit taking
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Sugar prices in New York settled close to two-and-a-half-year lows on Tuesday as speculative investors and traders continued to sell sweetener amid concerns about a growing surplus following forecasts of a record crop from Brazil, the world's biggest producer, in 2013/14.
Coffee and cocoa prices put in their weakest one-day performance in more than two months as investors locked in profits after their brief rally last week.
Raw sugar futures remained under pressure, with March settling down 0.25 cent or 1.36 percent at 18.12 cents per lb, its lowest level for the front month since Aug. 10, 2010.
Dealers and analysts said both the technical and fundamental outlooks for the market were bearish, with a break below 18.25 cents likely to trigger further losses. Prices could fall "all the way to around 18 cents," said VTB Capital analyst Andrey Kryuchenkov.
As top producer Brazil's cane crush nears completion, focus has shifted to the coming crop, which is expected to surpass a bumper 2012/13 crush. Recent heavier-than-usual rains helped the sugarcane crop while demand remains lackluster.
Unica, the country's sugar association, forecast an increase in output of 10 percent to a fresh record in 2013/14.
As a result, traders and speculative investors have added new shorts. On Friday, open interest, the number of outstanding contracts, rose above 810,000 lots, its highest level since February 2010, according to ICE data.
"The market appears to be getting used to a large fund net short and, most likely, the short is even larger by now," said Michael McDougall, a vice president at Newedge USA in New York.
March white sugar on Liffe closed down $6.6 or 1.34 percent at $483.2 per tonne, the lowest level for the front month since June 2010.
COFFEE, COCOA DOWN
Business was brisk with volumes in cocoa and coffee double their 30-day average after markets reopened following the long holiday weekend in the United States.
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