Sugar, cocoa and coffee fell in New York as commodities declined the most in more than a month after the dollar advanced on concern the Federal Reserve will reduce stimulus measures should the economy continue to improve.
The Standard & Poor’s GSCI index of 24-raw materials fell as much as 2 percent, the biggest intra-day drop since May 10. The U.S. dollar index gained for a second day to the highest level since June 10 after Chairman Ben S. Bernanke said the Fed may start reducing bond purchases that fueled gains in markets globally, and end the program known as quantitative easing in 2014 should risks to the U.S. economy abate. China’s manufacturing is shrinking at a faster pace this month.
“What we are seeing is a broad sell-off across all commodities, led by precious metals,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by e-mail today. Bernanke’s comments yesterday sent the dollar and bond yields higher, reducing the appeal of commodities, and Chinese manufacturing data led to further deterioration, Fritsch said.
Raw sugar for delivery in October declined 2 percent to 16.94 cents a pound by 5:53 a.m. on ICE Futures U.S. in New York, reversing a rally yesterday. Arabica coffee for September delivery was down 1.5 percent to $1.2255 a pound, while cocoa for September delivery slid 1.5 percent to $2,183 a ton on.
The preliminary reading of 48.3 for a Chinese Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compares with the 49.1 median estimate in a Bloomberg News survey of 15 economists. May’s final reading of 49.2 was the first below 50 since October, indicating contraction.
Sugar climbed as much as 2.1 percent yesterday after research firm Datagro Ltd. said the global sugar surplus could drop to a four-year low because of rising demand for ethanol in Brazil, the world’s leading producer of the sweetener.
Sugar output will exceed demand by 430,000 tons in the 2013-14 season starting Oct. 1, compared with a previous estimate of 6.18 million tons, Plinio Nastari, president of Datagro, told reporters in Sao Paulo yesterday.
In London, white, or refined, sugar for August delivery fell 1.4 percent to $489 a ton on NYSE Liffe. Robusta coffee for September delivery retreated 1.4 percent to $1,770 a ton, while cocoa for delivery in September declined 0.3 percent to 1,444 pounds ($2,232) a ton.
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