The British pound slumped to two-week lows after weak survey data and uncertainty about Brexit talks pushed it below a key market level, forcing some investors to cut some bets. The spread between the March and May contracts moved sharply. The March contract settled at a $13 premium over May, after having traded at a discount to May for the past several months.
The move implied strong near-term demand and some tightness in the spot market, dealers said. May New York cocoa settled down $13, or 0.6 percent, at $2,250 per tonne. Crop conditions in Ivory Coast remained generally favorable and cocoa arrivals at ports in the world's top producer are running ahead of last season's pace.
March raw sugar settled down 0.03 cent, or 0.2 percent, at 12.82 cents per lb. The market remained within its recent trading range despite a run-up on Monday with potential exports from India hanging over the market. The discount for the front month March, however, has been largely erased, indicating short-term supplies might be tighter than previously believed.
"The market seems to have kicked the surplus can out of the first quarter of 2019," Commonwealth Bank of Australia analyst Tobin Gorey said. Consumption of hydrous ethanol in Brazil reached 19.38 billion liters in 2018, the highest annual volume on record, cane industry group Unica said.
March white sugar settled up $1.90, or 0.6 percent, at $341.90 per tonne. March arabica coffee settled down 0.75 cent, or 0.7 percent, at $1.0485 per lb. Dealers continued to monitor dry weather conditions in top grower Brazil. Showers were expected to be too light to reverse dryness in southwestern growing regions of the country, while showers anticipated in Minas Gerais at the end of the week were expected to reverse dryness there, weather forecasters with Radiant Solutions said in a daily note.
Colombia's arabica coffee crop will recover in 2019 as a mild El Nino weather phenomenon aids flowering, a growers group said. March robusta coffee settled down $21, or 1.4 percent, at $1,535 per tonne as trade in the physical market was slowed by the Tet Lunar New Year holiday in top robusta producer Vietnam.