NYBOT raw sugar futures closed higher on Wednesday on speculative buying although producer sales scuppers an attempt by the funds to push it higher and this will likely keep a lid on the market, brokers said.
March sugar added 0.11 cent to finish at 9.04 cents a lb, dealing from 8.98 to 9.07 cents. May rose 0.09 to 9.15 cents. The rest went up 0.03 to 0.06 cent. "The producers and the locals capped the market," a floor dealer said.
"We tried to get over 9.10 (cents, basis March), but we just did not have the energy to get over the hump." Fundamentally, the market is looking at longer-term bullish factors like a supply deficit in 2004/05 and possible uptakes in consumer buying.
But the short-term outlook is seen as bearish because sugar has failed to race past recent highs and the funds may need to reduce their long positions in sugar, analysts said. Traders said a fall in the March contract below the 8.80 cent level could spark long liquidation in the market.
"We should probe lower if we cannot hang onto this level," one said. Technicians believe resistance in the March contract would be in the region of 9.09 and 9.14 cents. That would be followed by 9.40 and 9.75 cents. Support was at 8.90 and then down to 8.78 cents.
Estimated volume just before the market closed for the day hit some 12,055 lots, from about 34,348 lots previously. Call volume at that time hit 1,602 lots while puts were 1,340 lots.
Open interest in the No 11 sugar market at the New York Board of Trade fell 2,297 lots to 336,318 lots as of October 19.
Ethanol futures closed unchanged with the November contract settling at 109 cents a gallon.
US domestic sugar prices finished mixed on Wednesday. January sugar rose 0.03 to 20.32 cents a lb and March gained 0.02 to 20.42 cents.
Except for one contract, the rest were flat to 0.04 cent lower. Traded volume just before the market concluded business hit 950 lots, from some 79 lots previously.
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