Forexpros – U.S. soft futures were mostly lower during early U.S. morning trade on Monday, with sugar and coffee prices consolidating recent gains made on the back of ongoing concerns over crop conditions in top grower Brazil.
Jitters over the global economy and a broadly stronger U.S. dollar also weighed on the softs commodities complex.
Markets remained jittery after Chinese Premier Wen Jiabao warned over the weekend that China’s economy has not yet entered a recovery and “difficulties may continue for some time.”
He added that that policy makers were likely to introduce measures to boost growth in the second half of the year, according to the state-run Xinhua News Agency.
The comments followed government data released Friday showing China’s second quarter economic growth slowed to 7.6% from a year earlier, compared to 8.1% in the first quarter.
The Asian nation is the world’s largest consumer of many commodities, including sugar and cotton, and has been the engine of strengthening demand.
Worries over the euro zone’s debt crisis continued to weigh on the single currency. The euro hovered just above a two-year low against the greenback, while the dollar index was up 0.3% to trade at 83.70.
A stronger dollar makes U.S. commodities more expensive for importers holding other currencies such as yen or euro.
On the ICE Futures U.S. Exchange, sugar futures for October delivery traded at USD0.2267 a pound, easing down 0.2%.
It earlier fell by as much as 1% to trade at a session low of USD0.2238 a pound. Prices hit USD0.2304 a pound on July 10, the highest since April 18.
Sugar prices have rallied in recent sessions as concerns that heavy rains in Brazil could damage sugarcane crops in the country’s center-south region boosted sentiment on the sweetener.
Brazil’s top sugar industry group Unica said that the nation’s sugar output since the start of the harvest totaled 4.9 million tons, down 28.1% on the year.
Brazil’s Center South-region produces nearly 90% of the nation’s sugar. Brazil is the world’s largest sugar producer and exporter, with the USDA estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.
Sugar traders were also monitoring crop conditions in India, where a poor monsoon season has weighed on the quality of the crop.
Meanwhile, Arabica coffee for September delivery traded at USD1.8693 a pound, shedding 0.3%. It earlier fell by as much as 1.15% to trade at a session low of USD1.8535 a pound.
Prices rallied to a four-month high of USD1.9215 a pound on July 11, as concerns over the impact of rains in Brazil on the crop boosted sentiment on the commodity.
Brazil is the world’s largest producer and exporter of Arabica coffee. Arabica is grown mainly in Latin America and brewed by specialty companies.
Despite recent gains, coffee prices have been under pressure in recent months, losing nearly 25% since mid-January as traders eyed a huge harvest in top grower Brazil and speculators pushed prices lower.
Coffee fell to as low as USD1.4887 a pound on June 14, the lowest for the second-month contract since mid-June 2010.
Elsewhere, cotton futures for October delivery traded at USD0.7197 a pound, adding 0.3%.
Earlier in the day, prices rose to as high as USD0.7231 a pound, the highest since July 5.
Market players were looking forward to the release of the U.S. Department of Agriculture’s weekly crop progress report due out after Monday’s closing bell.
In last week’s report the USDA said that nearly 44% of the crop was rated in ‘good’ to ‘excellent’ condition, down from 47% a week earlier.
In the major producing state of Texas, only 35% of the cotton crop was seen as in ‘good’ or ‘excellent’ health, unchanged from the previous week.
The USDA last week cut its estimate for global cotton supplies at the end of the 2012-13 season to 72.39 million bales, down 2.85% from the record 74.51 million bales forecast in its June supply report.
China’s 2012-13 ending stocks were forecast at 31.8 million bales, accounting for nearly 44% of total world ending stocks.
The fiber is down almost 65% from a record in March 2011 as higher prices prompted farmers to plant more crops and demand in top consumer China slowed.
Front-month prices slumped to a 32-month low of USD0.6617 a pound on June 4.
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