A strong dollar triggered investor selling of coffee and sugar futures

Firm oil price seen limiting losses.

A strong dollar triggered investor selling of coffee and sugar futures, with Far Eastern producer selling dragging on robusta coffee on Monday, while the weak pound bolstered London cocoa.

"The stronger dollar is weighing on the coffee market," one London robusta dealer said.

The dollar rose broadly on Monday as global recession fears and banking sector concerns pulled shares lower and encouraged investors to move back into the perceived safety of the U.S. currency.

Dealers talked of Vietnamese origin and investor selling of robusta coffee futures, and of light rollover business in nearby month contracts, with firm oil prices limiting downward moves across the soft commodities board.
London May robusta coffee futures were down $43 or 2.9 percent to $1,458 per tonne, after earlier touching a contract low and key support level at $1,450, in modest turnover of 2,367 lots at 1208 GMT. ICE May arabicas were down 1.2 cent at $1.06 per tonne.
The firm dollar pushed benchmark raw sugar futures below their key 12.50 cents a lb support.

"The steady oil price may prevent people from selling too much," one London sugar futures dealer said.
Oil rose more than 1 percent to above $46 a barrel on Monday on speculation OPEC may agree to cut production further at a meeting this weekend.
TIGHT SUGAR SUPPLY
Dealers talked of a tight supply backdrop of sugar, with a focus on how much of the sweetener India, the world's top consumer, will import in coming months.
ICE May raw sugar was down 0.31 cent to 12.47 cents a lb at 1212 GMT, while London May white sugar was down $7.40 or 1.9 percent at $375.9 per tonne in moderate volume of 1,389 lots.
The soft pound gave support to London cocoa futures in thin turnover, while the dollar pushed U.S. futures lower.
Sterling hit its lowest in six weeks against the dollar and a 5-week trough versus the euro on Monday, pressured by falling UK share prices after Britain's government upped its stake in Lloyds Banking Group.
Dealers also talked of light rollover business, and digested headlines from a Miami cocoa industry conference.
* The International Cocoa Organization's (ICCO) lower global cocoa grind estimate will prove true only if grindings in Europe and the United States fall in the first half of 2009, Steven Wateridge said on Saturday, speaking on behalf of the ICCO expert working group on stocks.
* Crop disease, ageing trees and resulting lower yields will prevent significant cocoa production growth in the biggest producing countries Ivory Coast, Ghana and Indonesia, experts said Saturday.
* Asia's cocoa grind, a measure of demand for chocolate's key ingredient, is expected to fall this year as consumers in Europe and the United States tighten their wallets amid the financial crisis, said Jasbir Singh, general manager for Armajaro KL.
London May cocoa was up 5 pounds or 0.3 percent to 1,760 pounds per tonne in slim volume of 1,331 lots at 1217 GMT, while ICE May cocoa was down $36 to $2,236 per tonne.

source: reuters