By Carolyn Cui

Soft commodities were mostly lower Monday as the U.S. dollar continued its upward march against currencies of major producers, triggering liquidation selling from speculators in those markets.

Cocoa for March delivery fell 2.1% to settle at $2,418 per metric ton, while frozen concentrated orange juice for January was down 2.8% to close at $2.1100 per pound. Raw sugar for March delivery was 0.3% lower to end at 21.63 cents a pound.

The strong rally in the dollar was the "principal" factor behind the price declines in soft commodities, said Jack Scoville, vice president of Price Futures Group. Commodities are priced in U.S. currency, and a strongerdollar would allow exporters in producing countries to recoup more of their local currency for sales. Therefore, buyers of the commodities would ask the sellers to lower their prices.

The U.S. Dollar index added 0.8% Monday to 100.04, the highest level since December 2015.

On the other side, the Brazilian real was 1.3% weaker against the dollar in recent trading, bringing its total loss to 7.7% since the outcome of the U.S. presidential election last Tuesday. Brazil is the world's largest producer of orange juice, sugar and coffee. Other commodity currencies also fell on concerns that possibly protectionist policies under President-elect Donald Trump could hurt trade, with the Colombian peso down 0.6% and the Indian rupee 0.5% lower, despite repeated attempts by central banks to prop up the currencies.

Arabica coffee for December staged a surprising rebound in the last few minutes of trading, ending 1.5% higher at $1.6180 a pound.Also bucking the trend was cotton, whose December futures edged up by 0.7% to 68.90 cents a pound. The International Cotton Advisory Committee on Monday lowered its estimate for total cotton stocks in the world to 17.8 million tons by the end of 2016/2017 due to China's stepped-up efforts to reduce its state reserves of cotton. Global cotton production is expected to increase by 7% to 22.4 million tons, as output gains in the U.S. and Pakistan are seen to more than offset the loss in China.

The recent bout of currency volatility hit soft commodities at a time when speculators were swarming into these markets with ideas that years of low prices and reduced supplies would finally send these markets into a global deficit. The latest weekly Commitments of Traders report indicated net position of noncommercial funds in the arabica coffee market hit the highest level in at least a decade, of 58,960 lots in the week ended Nov. 8, right before the election results were unveiled. Speculators also increased their bullish bets in the sugar market over the past week, according to the Commodity Futures Trading Commission.

Write to Carolyn Cui carolyn.cui@wsj.com

(END) Dow Jones Newswires

November 14, 2016 17:26 ET (22:26 GMT)

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