SOFTS-Raw sugar lowest in nearly a year, Europe debt weighs

Wed Apr 18, 2012 2:43pm EDT

Related Topics

* Macro fears rekindled by Spain's budget issues

* Sugar weighed by potential further Indian exports

* Cocoa dips ahead of North American grindings release

By Rene Pastor and Naomi O'Leary

NEW YORK/LONDON, April 18 (Reuters) - Raw sugar futures finished on Wednesday at their lowest in almost a year and most of the soft markets weakened as the euro zone debt crisis crept back into the markets.

The sweetener also was pressured by news that India is likely to consider more sugar exports soon as it is set to produce a surplus for a third straight year in the 12 months from Oct. 1, Food Minister K.V. Thomas said.

U.S. stocks fell as worries over Spain's budget problems reignited fears the debt crisis could again undermine financial markets.

"I think watching the situation in Spain will be a key for a lot of these commodities," said Country Hedging Inc analyst Sterling Smith, adding a strengthening of the dollar on safe-haven buying would undermine dollar-denominated commodities.

May raw sugar futures on ICE dropped 0.68 cent or almost 3 percent to finish at 22.34 cents per lb, the lowest settlement for the spot contract in almost a year, said Thomson Reuters data.

Benchmark London August white sugar futures fell $10.10 or 1.7 percent to conclude at $586.90 per tonne.

More Indian exports would serve to bloat supplies and nudge the markets lower.

"The market is still nervous because nobody is sure whether Indian sugar will be delivered and this morning the food minister said they may be releasing more sugars. All this is unnerving anyone who's at all bullish," one dealer said.

"India is of course now a major net exporter and is expected to sell a record amount this year," Nick Penney of brokers Sucden Financial said in a market note.

COCOA ENDS LOWER, COFFEE CLOSES FIRM

Cocoa futures finish lower.

U.S. bean values fell for the first time after five straight days of gains, due to strong resistance from the 100-day moving average around $2,286 per tonne, basis July, and to pressure from the weak commodity complex.

"This one's a bit more technical than anything else. People just started taking money out of here," said Hector Galvan, senior market strategist for RJO Futures in Chicago.

"Right now it's just watching the outside markets to see what kind of direction it should take," Galvan said. "We were unable to get above that next hurdle. I think people are just squaring some positions here, taking some money out."

July cocoa on ICE declined $24, or 1.05 percent, to end at $2,257 per tonne. July cocoa futures on Liffe fell 7 pounds to finish at 1,479 pounds a tonne.

Dealers said North American grind figures, expected on Thursday, would provide a short-term focus.

Macquarie analyst Kona Haque said global demand for cocoa was likely to slow this year, reflecting a weaker economic outlook, but that emerging market demand growth would prevent a significant fall.

Arabica coffee prices saw another choppy session, hovering just above Tuesday's 18-month low in a narrow trading range.

"It's just following the trend lower," Galvan said. held steady just above an 18-month low set earlier in the week.

July arabicas on ICE rose 0.30 cent to finish at $1.75 per lb, trading just above Monday's 18-month low, basis second month, of $1.7390.

Benchmark Liffe July robusta coffee futures gained $15 to close at $2,029 per tonne.

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