March 6, 2020 / 11:12 AM / 23 days ago

SOFTS-Cocoa hits six-week low on demand fears, sugar also weaker

LONDON, March 6 (Reuters) - Cocoa futures fell to a six-week low on Friday, weighed by a potential weakening in demand partly linked to the spread of the coronavirus, while raw sugar slid to a seven-week low.

COCOA

* May New York cocoa was down $18, or 0.7%, at $2,579 a tonne at 1051 GMT after setting a six-week low of $2,577.

* Dealers noted concerns that demand could weaken both because of the spread of the coronavirus in Europe, the most important consuming region for chocolate, and potential price rises linked to the inclusion of a Living Income Differential (LID) in sales of cocoa from Ivory Coast and Ghana.

* Chocolate maker Lindt warned this week that price increases were inevitable due to the LID, not only for the company but for the industry as a whole.

* The International Cocoa Organization is scheduled to release its first forecast for the global balance in 2019/20 on Friday.

* A Reuters poll issued in late January gave a median forecast for a deficit 70,000 tonnes.

* “Though a small supply deficit has been assumed by market participants so far, weaker demand could quickly turn this into a surplus,” Commerzbank said in a note.

* May New York cocoa may test a support at $2,568 per tonne, a break below which could cause a fall to $2,481, Reuters technical analyst Wang Tao said.

* May London cocoa fell 12 pounds, or 0.6%, to 1,886 pounds a tonne after setting a six-week low of 1,885 pounds.

SUGAR

* May raw sugar was down 0.08 cents, or 0.6%, at 13.34 cents per lb after hitting a two-month low of 13.33 cents.

* Dealers noted gains during the market’s strong rally in January and February, when the May contract climbed from a 2020 low of 13.20 cents on Jan. 2 to a peak of 15.29 cents, had now been largely erased as funds liquidated long positions.

* “The falls in sugar prices have been hefty, but the scale of the rally that preceded it was also hefty. And hefty enough that the New York May ‘20 is still ever so slightly above its calendar 2020 low,” Commonwealth Bank of Australia analyst Tobin Gorey said.

* May white sugar fell $3.20, or 0.8%, to $380.30 a tonne.

COFFEE

* May arabica coffee rose 1.75 cents, or 1.6%, to $1.1310 per lb.

* Dealers said the market continued to derive support from tightening supplies with exchange stocks falling this week. .

* May robusta coffee was up $12, or 0.9%, at $1,286 a tonne. (Reporting by Nigel Hunt; Editing by Alexander Smith)

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