New York sugar finishes lower as switch trade dominates

Raw sugar futures settled lower on Wednesday as fund accounts liquidated positions in the spot contract, with more switch trade seen from players before the October contract expires at month's end, analysts said.
The New York Board of Trade's key October raw sugar contract fell 0.07 cent to close at 10.13 cents a lb., trading from 10.05 to 10.18 cents. March lost 0.11 to 10.66 cents.
Except for one contract, back months declined 0.02 to 0.08 cent. "It's really mostly spread business and I don't see it changing because of the large open interest in October," an investment house dealer said. Open interest in the October contract slid 10,600 lots to 234,720 contracts as of September 6.
The contract goes off the board on September 30. Fundamentally, analysts said strong demand coupled with a diversion of cane to ethanol given huge spikes in crude prices has powered a searing rally in sugar.
Steady consumer demand from places like the Middle East has also supported sugar.
Funds steadily liquidated their positions in October throughout the day, but trade buying kept losses to a minimum by the end of the session, dealers said.
"It is overbought and you feel that at some point it should come off a bit, but no one seems ready to jump in front of it," a trading house analyst said.
Technicians feel resistance in the October contract would be at 10.25, then the contract peak of 10.35 cents. Support was pegged at 10 and 9.90 cents, they said.
Estimated volume before the close of business stood at 69,046 lots, from the previous 74,904 lots. Call volume touched 10,627 lots and puts reached 4,383 lots.
Open interest in the No 11 raw sugar market increased 2,227 lots to 485,634 lots as of September 6. Ethanol futures closed flat, with the September contract ending at 250.80 cents a gallon.
US domestic sugar prices finished easier. November slipped 0.06 cent to 20.64 cents a lb. and January shed 0.02 to 20.43 cents. The rest fell 0.01 to 0.11 cent.
Volume traded before the close of trade reached around 790 lots, from the previous count of 973 lots.