Soft futures fall on strong dollar

Soft futures fell on Thursday, following almost all dollar-priced commodities, as the greenback advanced against all its major counterparts. The dollar index jumped 0.8% and reached a two-week high after Ben Bernanke, Fed chairman, announced that the central banks monetary easing program will probably be scaled back in the second half of the year, if the economy recovery continues its pace and keeps in line with projections. Bernanke also stated that the Quantitative Easing will come to an end as the unemployment rate drops do 7%, which Fed expects to happen around mid-2014.

On the ICE Futures U.S. Exchange, cotton futures for December delivery traded at $0.8535 a pound at 12:15 GMT, down 1.46% on the day. Prices ranged between daily high and low at $0.8672 and $0.8517 respectively.

According to the USDA weekly crop progress report on Monday, as of June 16 95% of the U.S. cotton crop was planted, compared to 88% in the preceding week. This is close to last year’s 98% and the five-year average 97%. As for the crop condition, 19% was categorized as “Very poor” and “Poor”, 39% was “Fair” and 42% was “Good” and “Excellent”, which is overall worse than last year’s crop state.

Meanwhile, arabica coffee for September delivery lost 1.17% for the day, trading at $1.2275 a pound. The C contract touched a days low at $1.2238 earlier.

In London, robusta coffee for September delivery performed similarly and fell 1.23% to trade at $1 772 a ton at 12:10 GMT. The sort that is mainly grown in Vietnam and Indonesia ranged between days high and low $1 785 and $1 758 a ton.

Both sorts were under pressure recently as favorable weather conditions boosted prospects for crop development in the worlds top two producers and exporters of the two sorts – Brazil and Vietnam. According to the International Coffee Organisation, the 2012-2013 arabica production in most countries will jump 5.7%, and robusta output will jump by 8.8%.

Elsewhere on the market, sugar also declined, losing 1.86% on the day. Sugar July futures traded at $0.1662 a pound at 12:19 GMT, ranging between days high at $0.1683 and low of $0.1643. The sweetener was supported recently as demand for ethanol in Brazil rose, which made millers use 6% more cane for production of the biofuel, compared to last years 52%.