The question now is how much demand destruction will be triggered by these high prices," said Pierre Sebag of consultancy Sugar K Ltd. Dealers also said they anticipated producer selling against plans by the EU to increase its out-of-quota exports."
March robusta coffee settled down $6 at $1,324 per tonne, against a backdrop of ample global supplies. The European Commission said on Wednesday it had proposed to allow an additional export of 500,000 tonnes of out-of-quota sugar in the 2009/2010 marketing year due to exceptional EU and world market conditions.
Sugar prices will reach historic milestones by the end of March 2010 as a global supply shortage tightens its grip on the market and increases investor fervour for the sweetener, a Reuters poll showed. Sugar futures more than doubled last year and have rallied by about 6 percent so far this year after disappointing seasons in leading producers Brazil and India.
Cocoa prices are on course for multi-year highs in 2009/10, supported by rock-solid supply fundamentals with a bigger global market shortage of beans, a Reuters poll of market participants showed on Thursday. Coffee futures lower, turning lower as the dollar advanced. Prices head earlier edged up with the market seen as technically oversold after recent price weakness.