By Julie Wernau

Coffee prices fell sharply Tuesday as traders made bets on how the outcome of the U.S. presidential election would impact demand for commodities.

Arabica coffee for December delivery fell 2.3% to $1.7035 a pound on the ICE Futures U.S. exchange, on track for its first fall in five sessions.

After trading in a range for much of the year, in the lead-up to the election, arabica coffee futures have become a favored bet among speculators. The contract is up 12% since the beginning of October.

"The coffee market is the subject of a speculative frenzy," said Carlos Mera, a senior commodities analyst at Rabobank.

In the case of a win by Republican presidential candidate Donald Trump, coffee market speculators are counting on the rise of the euro. Europe is the largest consumer of coffee and a stronger euro is seen as strengthening demand for coffee.

The same isn't true in all commodity markets. In the sugar market, for instance, the European market is protected and a stronger euro would be unlikely to impact prices.

David Martin, managing member of hedge fund Martin Fund Management, said Tuesday's move lower in coffee shouldn't be interpreted as traders betting on a win by Democratic presidential candidate Hillary Clinton but rather as money managers "taking money off the table" as they await the outcome of the election.

In other markets, raw sugar for March dropped 1.1% to 22.03 cents a pound, cocoa for March was up 0.9% at $2,467 a ton, frozen concentrated orange juice futures for January fell 1.9% to $2.178 a pound and December cotton lost 1% to 69.01 cents a pound.

Write to Julie Wernau at

(END) Dow Jones Newswires

November 08, 2016 11:31 ET (16:31 GMT)

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