Cocoa, coffee and sugar lurched lower, dragged down by a fall in oil prices, worries about excess supplies and system selling. The raw materials, known as “soft commodities” among traders, have seen a build up of bearish bets by short term speculative investors including hedge funds.
According to Financial Times’ (FT) report, Marex Spectron, commodities brokers said “we can argue about fundamentals, relative values , pricing models and weather, but in reality it seems the most likely culprits for the market emasculation is once again the system funds and algos.”
Cocoa in New York, has fallen almost 10 per cent since the start of this week, settling at $1,853 a tonne on Wednesday. Some traders are watching to see whether it tests $1,756, the 10-year low seen in April. Sugar is trading at 13 cents a pound, a 16-month low, while arabica coffee is at $1.2195 a pound, a level not seen since May last year.