New York sugar ends at two-week low

Raw sugar futures settled at a two-week low on Wednesday on a flurry of speculative sales and the poor tone of the market may lead to further losses in the days ahead, brokers said. The New York Board of Trade's March raw sugar contract slumped 0.27 cent, or 2.3 percent, to end at 11.49 cents per lb., trading from 11.47 to 11.68 cents.
It was the lowest finish on a spot basis for the contract since concluding at 11.47 cents on November 22. May fell 0.22 to 11.58 cents. The rest lost from 0.08 to 0.18 cent. "Everybody is playing it from the short side," James Corridor of Liberty Trading Group said, adding speculators apparently wanted to see if March could be shoved below support at 11.50 cents to see if automatic sell orders would be hit.
Fundamentally, the market has been struggling with a supply glut topping 5 million tonnes for 2006/07. Some analysts feel a fresh rally in energy prices next year may divert cane into the manufacture of the alternative fuel ethanol and spark an advance in sweetener prices.
Futures lost ground from the bell as relentless speculative fund pressure piled into the sugar pit, dealers said. "We saw some trade selling of the spread and, when the locals saw that, they sold it off," one said. Sizeable trade buying propped the market at the lows and this may allow the market to eventually stabilise, traders said.
"If that happens, we could see some of those locals cover," a broker explained. Technicians feel resistance for the March contract at 12 and 12.15 cents, with support at 11.47 and down to 11 cents. Volume before the close hit 39,079 lots, from the prior count of 50,040 lots. Call volume amounted to 11,540 lots and puts hit 4,442 lots.
Open interest in the No 11 raw sugar market rose 4,030 to 550,143 lots as of December 5. The ethanol market was untraded. US domestic sugar prices finished mixed. The January contract fell 0.20 to 19.70 cents per lb. and March lost 0.13 to 19.72 cents. Three contracts aside, the rest gained 0.02 to 0.05 cent. Trades before the end reached 424 lots, down from the previous count of 618 lots.