Raw sugar prices banked on a steady barrage of trade and speculative fund buying to finish higher on Friday, as players turned their attention to the expiring October contract, analysts said.
The New York Board of Trade's spot October raw sugar contract rose 0.06 cent to expire at 10.95 cents a lb., dealing from 10.80 to 11.20 cents, matching for the second day a contract high reached on Wednesday.
Most-active March gained 0.09 cent to 11.23 cents, dealing from 11.13 to a new lifetime high of 11.33 cents. Back months increased from 0.06 to 0.10 cent. "The way the buying shaped up going into the close, it's got a chance of moving up.
The fundamentals still look good," a trading house floors dealer said. Sugar had recently scaled its highest level in almost five years, powered in part by heavy fund interest and bullish fundamentals, analysts said.
The prospect of more cane in leading producer Brazil going into production of the bifocal ethanol given high crude prices, tight supplies, a drought-hit cane crop in key exporter Thailand and robust demand is seen stoking sugar values.
After easing to its session low at the start, trade and fund buying catapulted the sweetener up before a final round of liquidation in October blunted the market's rise, dealers said. Open interest in October dove 8,263 lots to 14,428 contracts as of September 29.
Traders said final open interest might range from 5,000 to 10,000 lots. Volume traded before the close amounted to 42,173 lots, versus the previous tally of 69,187 contracts. Call volume hit 9,261 contracts and puts stood at 6,771 lots.
Technicians said they feel the next area the now benchmark March contract will probe is 11.50, 11.70 and 11.80 cents. Support would be at 11 and 10.86/87 cents. Open interest in the No 11 raw sugar market slid 5,233 lots to 446,277 lots as of September 29.
Ethanol futures closed flat, with the spot September contract settling at 300 cents a gallon. US domestic sugar prices closed sharply lower. November sank 0.55 cent to 21.05 cents a lb. and January slid 0.54 to 20.91 cents.
Except for two contracts, the rest lost 0.39 to 0.53 cent. The Mexico and US moved to settle a row over sweetener trade. Washington assigned a sugar import quota of 250,000 tonnes to Mexico, which in turn allowed 250,000 tonnes of imports of high fructose corn syrup.
US officials said supplies of refined sugar are tight, especially after Hurricane Katrina knocked out a major refinery in Chalet, Louisiana.
Volume traded before the end of business hit 266 lots, from the previous tally of 791 contracts.
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