Sugar price sinks to 2010 low; cocoa, coffee hit by profit taking

Jan 23 2013, 09:34 IST
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SummarySugar prices in New York settled close to two-and-a-half-year lows on Tuesday.

percent to settle at $1.486 per lb. That was the front month's biggest one-day fall since Nov. 20.

Top producers Brazil and Vietnam still have a lot of coffee to sell, a broker in London said.

Dealers noted the potential for further short-covering gains as farmers in Central America struggle to control the fungus, which is spread by the wind.

March robusta coffee futures closed down $32 or 1.62 percent at $1,938 a tonne with the market digesting gains after peaking at $1,989 on Friday, the highest level for the second position since Nov. 2.

Cocoa futures on ICE fell their most in three months in a correction after hitting a one-month high on Friday.

The market also digested the results of a Reuters poll, which said prices are expected to remain under pressure in the first quarter due to plentiful supplies.

In the longer term, chocolate makers will start to replenish stocks, having worked through their surplus inventory. Combined with a potential drop in output from West Africa, the world's main growing region, the market will swing into a deficit.

"In the near term, those deficits aren't being seen. That's one big reason you can't get this market to sustain prices at or above $2,300 (per tonne)," said Galvan.

March cocoa futures on ICE settled down $73 or 3.15 percent at $2,213 per tonne.

As expected, grindings in Asia, where an emerging middle class is eating more chocolate treats, rose 2.8 percent to 155,237 tonnes in the fourth quarter of 2012.

The region has been a pocket of strength while demand in more mature economies of North America and Europe has flatlined.

May cocoa futures on Liffe fell 32 pounds or 2.2 percent to settle 1,448 pounds a tonne.

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