March raw sugar was off 0.76 cent, or 3.5 percent, at 20.39 cents per lb at 1446 GMT after earlier dipping to a two-month low of 20.32 cents. Dealers said fund selling was driven partly by technical factors with a weak performance on Tuesday helping to create a more bearish outlook on price charts.
News that sugar production in the Centre-South of Brazil was slightly higher than some had expected in the second half of October also contributed to the bearish mood.
Industry group Unica said sugar production was 2.05 million tonnes, near the top of a range of forecasts of around 1.9 million to 2.08 million.
“We had slightly bearish Unica data with sugar production slightly higher than expected,” Rabobank analyst Carlos Mera said, adding other bearish factors included the recent weakness of Brazil’s real currency. “It seems like a good time for profit-taking,” he added.
The expiry of the ICE December white sugar contract saw the largest delivery in more than nine years with 535,850 tonnes tendered, exchange data showed on Wednesday.
The bulk of the sugar, 404,250 tonnes, was tendered with a load port of Jebel Ali in the United Arab Emirates.
Some dealers said the large delivery was bearish, suggesting the deliverers could not find a better market for the sugar, while others saw it as more neutral, with the receivers likely to already have a plan for disposing of the sugar.
“You don’t stick your hand up for the biggest delivery for quite some time if you don’t have a plan. Presumably they (the receivers) have a destination,” one trade source said. March white sugar was off $14.10, or 2.5 percent, at 540.60 per tonne.
New York cocoa futures rose as the market began to find support after falling to a 3-year low on Tuesday. March New York cocoa was up $11, or 0.5 percent, at $2,406 a tonne after setting a low of $2,385 on Tuesday, the weakest for the second position since August 2013.
Dealers said funds had been taking a more bearish stance on the market against the backdrop of an expected global surplus in the 2016/17 season.
March London cocoa rose 5 pounds, or 0.25 percent, at 1,997 pounds a tonne.
Coffee futures were little changed with March arabica off a marginal 0.03 percent at $1.6525 per lb and January robusta up 0.1 percent at $2,139 a tonne.