The prices of coffee, sugar and cocoa edged lower due to a decline in the prices of oil and 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.
“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,” Marex Spectron, a commodities broker said.
The dollar index, which tracks the U.S. currency against a basket of six major currencies, moved away from the near one-month high of 111.790 touched on Tuesday. This rise was due to geopolitical events that have boosted the safe-haven value of gold.
Spot gold was up 0.1 percent at $1,251.96 an ounce. It was lower by 0.1 percent for the week, and was on track for the third weekly loss in a row.
U.S. gold futures for deliveries in August went up 0.3 percent at $1.252.60 an ounce.
Cocoa in New York has dropped around 10 percent since the beginning of this week, settling at $1,853 per ton on Wednesday. Some Traders were looking to see whether it tests $1,756, the 10-year low seen in April. Sugar traded at a 16-month low of 13 cents a pound while Arabica coffee is at $1.2195 per pound, a level unseen since May of 2016.