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SOFTS-Coffee, sugar pivot down on S&P negative US outlook

Published 04/18/2011, 01:03 PM
Updated 04/18/2011, 01:12 PM
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* Liffe May sugar contract sees 375,150 tonnes delivered

* Shipper CMA CGM to send first ship to I.Coast on Tuesday

* Arabica falls from 5-week high, near recent 34-yr peak (Adds byline, dateline, was LONDON. Adds analyst comment, price table, updates prices)

By Marcy Nicholson and Sarah McFarlane

NEW YORK/LONDON, April 18 (Reuters) - Coffee and sugar futures reversed lower on Monday after Standard & Poor's revised its ratings outlook on the United States to negative from stable, hitting investor confidence.

Cocoa prices closed lower in thin volume on pressure from the weak macroeconomic scene as well as expectation that exports from top grower Ivory Coast appear likely to resume in the near future after a ban of nearly three months from a bitter power struggle there was recently lifted.

The U.S. dollar pared gains against the euro and hit session lows against the yen, while gold prices hit a record, after Standard & Poor's revised its rating outlook on the U.S., prompting aversion for riskier asset classes including commodities. S&P affirmed the 'AAA/A-1+' sovereign credit rating of the U.S.

"People are turning negative on commodities in general, particularly as economies are slowing and U.S. growth will be disappointing," Jonathan Kingsman, head of the Swiss-based Kingsman SA consultancy said. "It's possible that commodities generally are going off the boil."

ICE July arabica coffee reversed earlier gains to trade down 4.40 cents or 1.5 percent at $2.8670 per lb at 1642 GMT. Liffe July robustas closed down $43 or 1.7 percent at $2,425 a tonne.

"All risky assets would drive away a little bit of interest," said Rodrigo Costa, vice-president of Institutional Sales for Newedge USA. "That would be the reason to see coffee down, and sugar too."

July arabica hit a five-week high at $2.9310 per lb earlier in the session, flirting with last month's 34-year top for the second position at $2.9665 per lb, but fell easily on profit-taking and risk aversion, dealers said.

"There's some negative macro news out there today. It certainly helps to take some chips off the table where you can," one U.S. dealer said.

In sugar, dealers saw additional downside price risk due to expectations of ample global supplies and saw key support in ICE July raw sugar futures at 21 cents a lb.

ICE May raw sugar futures fell 0.17 cent or 0.7 percent to 24.42 cents a lb, after hitting a five month low at 24.00. London August white sugar fell $10.70 or 1.7 percent to close at $622.00 per tonne as the market digested the May delivery data from NYSE Liffe.

Liffe said 375,150 tonnes of white sugar were delivered against the expiry of the May contract including Thai sugars.

IVORY COAST WATCH

Top cocoa producer Ivory Coast was in focus as dealers awaited news after president Alassane Ouattara said last Wednesday that everything was in place for the immediate resumption of cocoa exports.

French container shipping group CMA CGM said on Monday its first ship would arrive in Ivory Coast on April 19 following the group's resumption of services to the country.

"The ships are going to start to export. It's only going to help to loosen up the price a little bit, loosen up the switches. Psychologically it gives some weight to the market as well," the U.S. dealer said.

ICE July cocoa futures tumbled $100, or 3.2 percent, to settle at $3,057 a tonne, while Liffe cocoa dropped 48 pounds, or 2.4 percent, to end at 1,931 pounds per tonne.

"Volumes are terrible, so any weak selling can trigger stops," a second London-based broker said, adding people were reluctant to trade cocoa without more information on Ivory Coast.

News on the state of the country's coming mid crop was also keenly awaited, traders said. * Prices as of 1647 GMT Product Last Change Pct Move End 2010 Ytd Pct ICE sugar 24.42 -0.17 -0.69 32.12 -23.97 ICE coffee 286.95 -4.15 -1.43 241.80 18.67 ICE cocoa 3055.00 -102.00 -3.23 3052.00 0.10 Liffe sugar 620.40 -12.30 -1.94 777.50 -20.21 Liffe coffee 2425.00 -43.00 -1.74 2097.00 15.64 Liffe cocoa 1930.00 -49.00 -2.48 2029.00 -4.88 CRB index 358.90 -3.88 -1.07 332.80 7.84 Crude oil 106.94 -2.72 -2.48 91.38 17.03 Euro/dlr 1.42 -0.02 -1.50 1.34 6.33 * ICE sugar and ICE coffee in cents per lb, ICE cocoa, Liffe sugar and Liffe coffee in dollars per tonne. Liffe cocoa in pounds per tonne. (Additional reporting by David Brough in London, Editing by Rene Pastor)

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