The stronger dollar knocked the stuffing out of soft commodities, sending cotton limit down in New York and setting orange juice to a tenth successive day of declines.

The greenback firmed on comments by Alexei Kudrin, Russia's finance minister, that there was "no alternative" to the dollar as a global currency, a view backed by the International Monetary Fund.

John Lipsky, the IMF's first deputy managing director, told a news conference: "The dollar is the principal reserve currency in the global economy and will remain so for as far as we can see."

The greenback's rise kick-started a vicious cycle of lower commodity prices, which undermined share prices, which in turn strengthened the dollar - a safe haven during storms in the global economic crisis.

A stronger dollar - which hit $1.37 against the euro on Monday - tends to weaken dollar-denominated commodities by making them more expensive to foreign buyers.

Stops started

While food commodities were hit across the board, softs proved especially vulnerable.

"The main reason I can see for a fall in commodities was that the strengthening dollar prompted a number of investors to lock into gains after a rally in commodities," said Jaspal Phull, an analyst at Stenham Advisors Plc.

Traders said the declines were accelerated by the triggering of stop losses, which investors use to limit their downside risk, but whose enactment had only added to selling pressure.

'Built on sand'

Cocoa lost 5.7% to $2,605 a tonne in New York for July delivery and 4.0% to £1,680 a tonne in London.

"It seems like this market was built on sand on a general commodities index bull run," one London cocoa dealer told Reuters, the news agency.

"It just got a bit out of hand. Personally, I think it could come down another $100 [a tonne]."

New York arabica coffee beans shed 4.8% to 125.35 cents a pound, leaving it 13% adrift of highs reached at the start of the month.

London robusta beans shed 4.3% to $1,475 a tonne.

Cotton unpicked

But cotton suffered the disappointment of falling the maximum of 3 cents allowed by the Ice Futures exchange at one point before recovering to end 4.9% lower at 53.34 cents a pound, its lowest close since late April.

And July orange juice, which has not managed a winning day since June 1, lost 5.9% to 77.65 a pound, its lowest for nine weeks.