London, Oct 6 - Coffee, sugar and cocoa futures fell to their lowest levels in months on Monday on further fund liquidation as the global financial markets crisis spiralled, and prices could fall further, dealers said.
"There is liquidation across the board," said one soft commodities trader. "Commodities are down, and the dollar is up. A storm is going on in the financial markets."
London coffee futures fell sharply with arabicas, which were driven down by index fund liquidation as investors questioned whether the scattered European response to the financial crisis and the $700 billion U.S. bank bailout could prevent a global recession.
ICE December arabicas were down 3.35 cents or 2.7 percent to $1.1870 a lb at 1017 GMT.
London January robustas were down $83 or 4.2 percent to $1,892 per tonne, a 10-month low basis second month.
Coffee futures risked falling further on fund and investor long liquidation, dealers said.
Further investment fund and investor liquidation dragged ICE raw sugar lower, and London white sugar futures fell in sympathy.
ICE March raw sugar futures were down 0.4 cent or 3.2 percent to 12.21 cents a lb at 1023 GMT.
London December white sugar futures fell $13.1 or 3.6 percent to $352.70 per tonne in modest volume of 631 lots, having earlier touched a 2-1/2-month low at $351.10 per tonne.
"Commodities (are) sharply lower in reaction to the financial tsunami taking hold in Europe and ongoing non-commercial long liquidation," Fortis said in a daily market report.
Soft commodities are reeling from the gloomy outlook of world economies and the adverse impact on demand for goods like coffee.
Analysts said the approval by the U.S. House of Representatives of a $700-billion rescue scheme expected to calm financial markets hit by toxic debt was welcome, but the full impact would need to be digested by the market.
London cocoa futures dropped on fund and investor selling with other commodities after ICE cocoa futures on Friday rebounded from a six-month low.
"The start for the week looks like another winner for the bears," a European broker said in a daily market report.
Benchmark December cocoa was down $73 or 3 percent at $2,396 per tonne at 1025 GMT.
London March cocoa was down 28 pounds or 1.9 percent to 1,440 pounds a tonne in reasonable volume of 4,331 lots at 1016 GMT.
The market's attention focused on the start of West African main crops, with an eye on impact of disease such as black pod after recent rains.
Ivory Coast opposition leader Alassane Ouattara launched his campaign for next month's presidential election before thousands of supporters, but he conceded the post-civil war poll may have to be delayed again.