By M. Shankar Feb. 5 (Bloomberg) -- White sugar fell to a three-week low in London as the dollar extended its rally, diminishing the appeal of commodities as an alternative investment. The U.S. Dollar Index, a six-currency gauge of the greenback’s value, added as much as 0.7 percent to the highest level since July. The S&P GSCI Index of 24 raw materials slid, extending its three-day retreat to 4.8 percent. “This is temporary before the underlying strength of fundamentals moves” sugar prices higher, Nicholas Snowdon, a trader at Barclays Plc in London, said today. “There’s the sharp appreciation in the dollar. Sugar is being driven down along with the decline across the commodity complex.” White, or refined, sugar for May delivery fell as much as $12.50, or 1.7 percent, to $716.40 a metric ton on the Liffe exchange, the lowest price since Jan. 18. The contract was at $718.90 at 10:26 a.m. local time. Raw sugar for March delivery dropped 0.3 percent to 27.56 cents a pound on ICE Futures U.S. in New York. Prices doubled last year as excess rains in Brazil and a weak monsoon in India hurt sugar-cane output from the world’s two biggest growers. Global demand for sugar will outpace supply by 13.5 million tons in the 2009-10 season, according to broker Czarnikow Group Ltd. Refined sugar last month climbed to $767, the highest level in at least two decades, in London. Cocoa for March delivery slipped 0.7 percent to 2,235 pounds ($3,507) a ton on Liffe. Robusta coffee for March delivery slid 1 percent to $1,297 a ton. To contact the reporter on this story: M. Shankar in London at mshankar@bloomberg.net.

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