Dealers said dry weather in Ivory Coast had prompted a run-up in prices in the second half of December and the market was now retreating as funds liquidate long positions taken during that period. "A dry spell made the market interesting. There has been the prospect of rain for a while and we've seen it now and there is more to come so that has put a bit of a dampener on things," one London dealer said.
A mix of strong rains and sunny spells last week in most of Ivory Coast's cocoa regions augurs well for the April-to-September mid-crop's development, farmers said on Monday. May New York cocoa was down $67, or 2.9 percent, at $2,273 a tonne. March raw sugar was down 0.08 cents, or 0.6 percent, at 12.95 cents per lb, weighed down by a decline in crude oil and broader macroeconomic concerns.
Oil prices fell nearly 2 percent on Tuesday on signs that an economic slowdown in China is spreading, stoking concerns about global growth and fuel demand. Lower oil prices can diminish the competitiveness of cane-derived ethanol in Brazil, raising the possibility of mills increasing the amount of cane used to make sugar.
Dealers said weakness in other markets outweighed some supportive news on sugar, including a diminishing outlook for production in India. Sugar output in India, the world's biggest consumer of the sweetener, is expected to fall by 2.5 percent in the season that began in October last year, a leading industry body said on Monday.
"The revisions in production have been supportive for the market, especially when you consider that prior to the start of the season some analysts were forecasting that output could total more than 35 million tonnes," ING said in a market note. March white sugar fell by $5.30, or 1.5 percent, to $349.40 a tonne.
March arabica coffee fell 0.90 cents, or 0.9 percent, to $1.0405 per lb. March robusta coffee was down $13, or 0.85 percent, at $1,525 a tonne. Coffee stocks held in European ports fell 1.4 percent in November, European Coffee Federation (ECF) data showed on Tuesday.