(Reuters) – Raw sugar futures on ICE opened at a five-week high but quickly turned lower on Monday, pressured by profit-taking and a surprise jump in the speculative net long position, while arabica coffee prices fell to a two-month low.
Cocoa prices also fell, taking a pause after climbing to a 2016 high at technically overbought levels on Friday.
London soft commodity markets were closed for a bank holiday and will reopen on Tuesday.
In sugar, technical selling also weighed on prices after the most-active contract opened at the highest price since March 24, leaving a gap of 0.05 cent from the prior session’s high.
ICE July raw sugar settled down 0.11 cent, or 0.7 percent, at 16.21 cents per lb after rising to 16.47 cents, the highest since March 24.
“We opened up strongly today with a gap, which is kind of dangerous and then we closed that gap, so that’s technically a little negative so we probably brought in some technical selling,” said Michael McDougall, director of commodities for Societe Generale in New York.
The market opened higher after the May contract expired on Friday, when prices surged nearly 6 percent and the May/July spread narrowed sharply in last minute dealings.
“We had a big reversal, a large modification in the negative sentiment on the delivery,” McDougall said.
Wilmar International Ltd scooped up about 422,000 tonnes, or 8,309 lots, of sugar against the May contract, according to exchange data and traders.
Commitment of Traders (COT) data released late Friday showed speculators added 29,293 contracts to their net long position.
“The COT showed specs’ large exposure and then we had the (Brazilian) real weak today, so it just caused spec liquidation,” one trader said.
The market shrugged off news from India, where government officials said the country will soon scrap an order that requires sugar mills to export excess supply after back-to-back droughts look set to turn it into a net importer by October.
Arabica coffee prices inched down to a two-month low as the market remained technically weak after falling below key moving averages last month, while Brazil’s weak currency also added slight pressure.
July arabica coffee settled down 1.85 cent, or 1.5 percent, at $1.1965 per lb, the lowest since March 3.
New York cocoa also fell, after rallying 9.3 percent in April.
July New York cocoa settled down $16, or 0.5 percent, at $3,217 per tonne.