Sugar, Coffee Fall on Emerging Market Currencies; Cocoa Slides

Soft commodities including sugar and coffee fell in London as weakening currencies in emerging markets boosted prospects for higher exports. Cocoa declined.

Fifteen of 24 emerging market currencies tracked by Bloomberg declined in the past month, with the Indian rupee, the Brazilian real and the Indonesian rupiah all losing more than 6 percent. Brazil is the world’s largest sugar producer followed by India. Indonesia is the third-biggest robusta coffee grower. Commodities fell on speculation the Federal Reserve will slow its stimulus program.

“Soft commodities have been under pressure from depreciating emerging market currencies, which are boosting producers’ revenues and increasing the prospects for exports,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by e-mail today. “There’s also a general decline across the entire commodities sector due to profit taking after decent gains recently.”

White sugar for October delivery fell 0.1 percent to $487.90 a metric ton by 11:42 a.m. on NYSE Liffe in London. Robusta coffee for November delivery slid 0.5 percent to $1,841 a ton.

The Fed will release minutes from its last meeting later today, which may provide clues on whether the pace of stimulus will be slowed. The Standard & Poor’s GSCI index of 24 raw materials fell as much as 0.5 percent. The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, rose 0.2 percent.

The weakness of the real against the dollar means that millers in Brazil will favor sugar over ethanol, Nick Penney, a senior trader at Sucden Financial Ltd. in London, said in a report e-mailed yesterday. Producers in India may seek to export sugar because the rupee reached a record low and the country is in the fourth year of domestic surpluses, Olam International Ltd. (OLAM) said.

In New York, raw sugar for delivery in October was little changed at 16.46 cents a pound on ICE Futures U.S. Arabica coffee for delivery in December gained 0.4 percent to $1.193 a pound after falling as much as 3.3 percent yesterday.

Cocoa for December delivery declined 0.7 percent to 1,648 pounds ($2,584) a ton on NYSE Liffe. Cocoa for delivery in December fell 0.7 percent to $2,503 a ton in ICE.

To contact the reporter on this story: Alex Pashley in London at apashley@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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