Cocoa led a sharp decline in food commodity prices on Tuesday as investors dumped riskier assets in the face of a fresh wave of concerns about the eurozone's financial wellbeing, and global economic growth.

Cocoa for July delivery slumped nearly 6% at one point in New York, while in London the near-term white sugar lot closed 4% lower.

In Chicago, all major crops lost ground, led by oats, which lost 5% for July delivery. Corn for the same month tumbled 2.6% to $3.25 a bushel, a nine-month low.

"It's pretty indiscriminate," a London analyst told Agrimoney.com as the declines gained pace. "Stuff is just getting sold off by the board, whatever the fundamentals."

Double dip fears

The sell-off, which also drove shares down by some 3% in Frankfurt and London, was blamed on a clamour for safer assets after a cocktail of weak economic data.

The yield on two-year US Treasury bonds, which fall as the prices of the debt rises, hit a record low below 0.6% as investors rushed for assets deemed amongst the safest havens.

The negative news included a fall of nearly 10 points in a month to a June reading of 52.9 in the Conference Board's much watched index of US consumer confidence, a retreat which stoked fears of a so-called double dip recession in the world's biggest economy.

The Board slashed its hopes for the Chinese economy, while Japan reported a surprise rise in its unemployment rate last month, and a drop in industrial production.

In Europe, the forthcoming expiry of a European Central Bank programme to support bank funding, and the prospect of a fresh attempt by Greece to raise funds, fuelled the migration to safer assets.

Winners head decline

"It's one of those risk-off days. Everything is coming off," Jake Wetherall at Rabobank said, also noting the rise of 0.5% in the dollar as investors snapped up US Treasury bonds.

A stronger greenback makes assets denominated in it less affordable to buyers in other currencies, and so tends to depress prices of commodities traded in dollars.

Cocoa and coffee, as commodities which have fared particularly well of late, "maybe particularly vulnerable when you have a move to risk aversion", he added.

New York arabica coffee beans for July lost 2.9% to end at 161.50 cents a pound, with London's July robusta lot shedding 0.6% to $1,667 a tonne.

Technical factors

At Sucden Financial, sugar analyst Nick Penney flagged the added volatility caused by the expiry on Friday of New York's July contract.

The lot itself was relatively strong - ending 2.3% higher at 17.58 cents a pound - thanks to strong demand for near-term sugar by buyers struggling to refill inventories sapped by last year's supply deficit.

Meanwhile, Brazil, the biggest exporter, was struggling physically to fill boats fast enough, leading Sucden to believe that "there won't actually be a large delivery against the July lot", Mr Penney said.

However, some buyers in July were hedging by selling against later lots, when Brazilian supplies should be easier to come by. Raw sugar for October delivery slid 3.4% to 15.28 cents a pound.

Indeed, there was evidence of many Brazilian mills had "taken the opportunity to price fix ahead" at 16 cents a pound, locking in a profit above a cost of production estimated at about 15 cents a pound.

Thai deficit

Ironically, the price falls came as Thailand, the world's second-biggest sugar exporter, said it may have to import the sweetener for the first time ever this year, after shortages blamed on contraband sales.

Smugglers can sell sugar in neighbouring Cambodia or Laos for twice Thailand's fixed domestic price of 23.5 baht ($0.72) per kilogramme.