Arabica coffee futures fell over 3 percent on Monday on investor long liquidation after speculators had cut their short positions, while raw sugar was little changed on cautious dealings as Europe's uncertain ability to contain the debt crisis.
Cocoa futures settled mixed and little changed.
Arabica coffee prices sank to a two-week low, as speculators were surprised by the U.S. Commodity Futures Trading Commission's (CFTC) latest Commitment of Traders report released post-market Friday, showing their net short position shrank.
"People were looking for the number to be somewhere around short 5,000 (lots) and when it was short 1,500 that started off a little bit of selling," said one veteran coffee dealer in New York.
"You had some continued spec selling as you broke down below some technical levels."
Speculators trimmed their net short position in arabica futures and options in the week ended Jan. 17 by 4,974 contracts to 1,361 contracts, CFTC data showed Friday.
New short selling triggered automatic sell orders and long liquidation below Friday's low at $2.2410 per lb and then again below $2.2110, dealers said.
Light origin selling also weighed on the market, dealers said.
Benchmark March arabica coffee futures on ICE fell 6.35 cents, or 2.8 percent, at $2.1905 per lb by 12:50 p.m. EST (1750 GMT), after dipping to a two-week low at $2.1785 a lb.
"If we see strong Brazilian production numbers that should take a little bit of the heat out of the market," said Keith Flury, analyst at Rabobank.
March robusta coffee on Liffe stumbled $47, or 2.4 percent, to $1,885 a tonne. The contract hit $1,712 on Jan. 9, the lowest level for the benchmark second month since October 2010.
Speculators cut a net short futures position in NYSE Liffe robusta coffee and increased net longs in cocoa and white sugar as of Jan. 17, exchange data showed on Monday.
Raw sugar futures were steady, hovering below Friday's two-month high, with dealers eyeing weather in top producer Brazil and a lower than expected production in Mexico.
March raw sugar futures on ICE changed direction and moved up 0.12 cent, or 0.5 percent, to 25.01 cents a lb.
"Things are being tempered a little bit," said Country Hedging Inc senior analyst Sterling Smith, adding the tone of business was quiet.
He said the key March contract appears to be facing resistance at 25 cents.
"Most of the talk has been about weather in Brazil that might delay the crop and also there's a bad crop in Mexico," said a London-based dealer.
The International Sugar Organization forecast in November Mexico's 2011/12 production at 5.325 million tonnes raw value, versus 5.495 the previous year.
"From the beginning of the crop we thought it could be slightly lower because the growing conditions were not perfect," said Sergey Gudoshnikow, senior economist at the ISO.
London March white sugar futures were up $6.00, or 0.9 percent, at $651.60 per tonne.
The global sugar surplus is forecast to more than halve into next season, and prices look set to ease by the end of the year, according to a Reuters poll of 17 analysts issued on Monday.
Cocoa futures on ICE closed up a shade, with March ending up $10 at $2,269 a tonne, as the uncertain demand outlook capped gains.
North American and European fourth-quarter cocoa grindings reported in recent weeks were up but below expectations, triggering concern over future demand growth, particularly considering the eurozone debt crisis.
"Grindings are still growing simply because of the powder demand in Asia," Rabobank's Flury said.
Cocoa demand growth is closely linked with global GDP growth.
Liffe March cocoa futures settled down 6 pounds at 1,483 pounds a tonne.
Swiss group Barry Callebaut is to supply Unilever , the world's third-largest consumer goods group, with 70 percent of its global cocoa and chocolate needs. (Editing by Alison Birrane and Jason Neely; Editing by Bob Burgdorfer)