Monday, 24 August 2015 18:40
LONDON: Raw sugar futures slumped to a seven-year low while arabica coffee slid to its weakest level in more than 1-1/2 years on Monday as slowing economic growth in China prompted broad-based losses in commodity markets.
Dealers said the weakness of Brazil’s real had also been a factor in the recent slide, making prices more attractive in local currency terms for producers in the world’s top grower of both commodities.
“Today has been a bad day for markets across the board with the news coming out of China and the fear gripping equity markets,” Capital Economics analyst Hamish Smith said.
“The continued weakness of the Brazilian real has also been one of the key factors driving (coffee and sugar) prices lower.” October raw sugar on ICE was off 2.0 percent at 10.23 cents a lb at 1120 GMT after earlier touching a 7-year low of 10.13 cents.
December arabica coffee was down 3.10 cents or 2.5 percent at $ 1.2335 per lb after slipping to a low of $ 1.2240, the weakest level for the second month since January 2014.
Many other commodity markets also fell with soybeans, copper and aluminium all hitting 6-year lows while crude oil slumped to its weakest level in 6-1/2 years.
Dealers said the prospect of a global sugar deficit in 2015/16, ending a run of five consecutive surpluses, had been unable to prevent prices falling.
“Industry sources are suggesting the (sugar) market is heading a deficit (in 2015/16) which should provide a little bit of support but it is the macro factors which have really been driving the price lower,” Smith said.
“The price of sugar hasn’t bucked that trend so far.”
White sugar futures fell less sharply with October down $ 3.10 or 0.9 percent at $ 330.60 per tonne, holding just above last week’s 6-1/2 year low of $ 329.00.
“The relative strength in whites may be the result of players feeling the recent demise of Oct whites to have been too precipitate,” said Sucden Financial senior trader Nick Penney.
November robusta coffee fell $ 15 or 0.9 percent to $ 1,627 a tonne after hitting a 3-month low for the second month of $ 1,610. Cocoa futures were dragged down by spillover weakness from other commodity markets with December New York off $ 24 or 0.8 percent at $ 3,050 a tonne.
December London cocoa was off 18 pounds or 0.9 percent at 2,031 pounds a tonne.
