Sugar futures tumbled the most in 11 weeks on renewed concern that Europe will fail to contain its fiscal crisis, dimming demand prospects for commodities. Coffee also dropped.
The Standard & Poor’s 500 Index of equities fell as much as 1.1 percent after a German government official said the country is pessimistic about the outcome of this week’s EU debt summit. The S&P’s GSCI gauge of 24 raw materials dropped as much as 1.4 percent. Sugar futures have plunged 28 percent this year amid rising supplies and dwindling demand.
“The weaker outside markets are weighing on” sugar, Sterling Smith, an analyst at Country Hedging in St. Paul, Minnesota, said in a telephone interview.
Raw sugar for March delivery slumped 4.7 percent to settle at 23.05 cents a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest drop for a most-active contract since Sept. 16.
A mounting crisis in Europe will mean “less trading finance and a worsening macroeconomic scenario,” Arnaldo Correa, a partner at Sao Paulo-based Archer Consulting, said in an e-mail.
The European Union issued licenses to export almost 700,000 metric tons of sugar in the season that started in October. Applications were made to export 1.29 million tons.
Arabica-coffee futures for March delivery fell 2.5 percent to $2.2985 a pound in New York. The price has dropped 4.4 percent this year after surging 77 percent in 2010.
In London futures trading, refined sugar and robusta coffee also declined on NYSE Liffe.