London, June 2 - Arabica coffee futures turned slightly after touching a new nine-month high on Tuesday as the market looked to consolidate after the recent run-up driven by a weak dollar and fund buying, dealers said.
White sugar futures were down from a near three-year high Monday, while ICE cocoa rebounded from earlier lows amid sentiment that the demand outlook for cocoa and chocolate products was not as subdued as initially feared.
"The markets are just pausing for breath," said Lars Steffensen, managing director of U.K.-based commodities fund Ebullio Capital Management.
"We saw a lot of buying yesterday with new money coming in at the beginning of the month and I think people are just stepping back a bit and waiting to see what happens.
"There's a bit of profit-taking," he said. "I don't think anyone's married to positions until we get a bit more clarity on what's actually going to happen in the world."
July arabica futures on ICE were off 0.60 cent at $1.4165 per lb at 1537 GMT after jumping to $1.4290 per lb earlier, the highest level for the front month since September 2008.
July robusta coffee futures in London were down $19 at $1,540 per tonne.
"It's healthy for the market to consolidate," a London coffee trader said. "We just need the funds to get back into the market."
FROST FEARS
Funds have been the major drivers of the market and Steffensen remains bullish on the commodity.
"Coffee is not going to see a major sell-off until we're sure we're not going to get a frost in Brazil," he said.
"If we get a frost it's a lottery ticket and it could go anywhere," Steffensen said, adding once the question of a frost is out of the way he expects coffee to "give quite a bit back".
Raw sugar futures were down 0.22 cent at 15.63 cents per lb.
August whites in London were little changed after hitting a contract high on Monday of $457.00 per tonne, the strongest for the front month since July 2006.
August whites in London were down $0.70 at $453.00 per tonne and raw sugar futures were down 0.16 cent at 15.69 cents per lb.
"It's possible to see now some consolidation," one sugar trader said. "But at some point after that the market will rally again and touch new highs.
"The sugar market fundamentally is very, very bullish," the trader said, adding that the deficit in India, the world's number one sugar consumer, will continue to be a major factor.
London cocoa futures edged up despite a strengthening pound.
"I think the markets are taking a bit of a breather," one cocoa dealer said.
Cadbury told Reuters in an interview that it sees India contributing about 3 percent of world cocoa output by 2020, sharply up from 10,000 tonnes a year currently.
September cocoa futures on ICE were up $30 at $2,697 a tonne, while London September cocoa futures were six pounds higher at 1,693 pounds per tonne.