"(There's) no real inflation around at the minute either."
    Commodities are often used as a hedge against inflation.
    The dollar bounced off a 15-month low as investors paused
to assess whether the global outlook justifies a recent rally
in higher-yielding currencies and assets. [ID:nN10323951]
    "The dollar is up a bit and I think funds are liquidating
everything across the board and coffee had a particularly  long
spec position," one dealer said.
    "Everyone was expecting some sort of (downside) correction.
There are a lot of long funds out there...Any sort of
negativity is magnified because everyone is trying to predict
the start of a decline," another coffee dealer said.
    Coffee saw the steepest setback with December arabica
futures on ICE <KCZ9> settling down 6 cents, or 4.3 percent, at
$1.3405 per lb, the weakest close in five weeks.
    Robusta coffee futures were also lower with January <LRCF0>
finishing down $95 at $1,320 a tonne, with harvest progress in
top robusta producer Vietnam also weighing on the market.
    Coffee prices in Vietnam, the world's second largest
producer after Brazil, dropped around 3 percent on Tuesday from
a week ago after London prices fell, hitting trade at the
harvest peak, traders said. [ID:nHAN426460]
    Sugar futures also turned lower amid a broad-based decline
in soft commodity markets.
    "The market is getting heavy and subject to liquidation,"
said Sterling Smith, an analyst for brokers Country Hedging Inc
in Minnesota, about raw sugar futures.
    A revival in consumer buying from countries like India,
Pakistan, Bangladesh, the U.S. and Mexico could change the
picture. Such a development "could easily pull us out of this
funk," said Smith.
    ICE March raw sugar futures <SBH0> fell 0.50 cent to finish
at 21.91 cents a lb, while London December <LSUZ9> white sugar
ended down $6.30 at $574.80 per tonne.
    Cocoa futures felt continued pressure by new harvests in
West Africa, the world's main growing region, as well as
follow-through technical pressure from Monday.
   "In my opinion, today's market sell-off could be attributed
to profit-taking in the December cocoa 3200 put options
exercised on Friday's close," said Michael Maniatis, market
strategist with LaSalle Futures Group in Chicago, about U.S.
cocoa futures.
    Outside market influences such as the dollar's bounce also
played a roll in the day's weak move, Maniatis said.
    "I would look for the rest of the week to see cocoa futures
hold support at $3,050 and a close back above $3,150 by week's
end," he said.
    ICE March cocoa <CCH0> fell $74 to settle at $3,140 per
tonne, the lowest settlement in a month. London March cocoa
<LCCH0> dropped 34 pounds to close at 2,065 pounds per tonne.
    "There is belief in the physical market that the fall in
cocoa prices reflects a great attention to fundamental
factors," one physical trader said.
  (Additional reporting by Rene Pastor in New York, Nigel Hunt
in London and Michael Hogan in Hamburg; Editing by Marguerita
Choy)