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ICE raw sugar futures rose, albeit quietly, to a firmer close Thursday as a depressed US dollar and all-time record highs in crude oil bolstered the sweetener, brokers said. ICE Futures May electronic sugar settled up 0.434 cent or 3.3 percent at 13.59 cents a lb after trading 13.10 to 13.63 cents.
By 1:33 pm EDT (1733 GMT), May sugar was 0.30 cent higher at 13.46 cents. Daily settlement times remain the same as they were during former open-outcry business, though contracts continue to trade electronically until 3:15 pm.
"The dollar is just completely getting hammered," said one New York dealer. "And, with $111 crude oil I'm sure the funds are still going to make an argument for the ethanol story in the background."
Higher oil prices may tempt producers, like Brazil, to funnel more cane to manufacture the alternate fuel ethanol. The first day of trading in the new January 2010, March 2010, May 2010, July 2010, October 2010, and January 2011 Sugar No 11 futures contracts saw limited activity, one trader said.
Rising margins on the ICE Futures US exchange was seen as a possible reason for the diminished participation in the sugar market this week, the trader added. "I think that short-hedgers have been so dissuaded from being involved in a greater way, because of margins and risk Because we're so disconnected from the fundamentals."
ICE Futures US increased margins for its cotton, coffee, cocoa and sugar No 11 futures contracts, effective with the close of business March 7. Chartists peg support in the May contract at 13.10 to 13.00 cents, with resistance at 13.80 to 14.00 cents.
In other news, soaring agricultural prices, growing demand for biofuels and the growth of the Chinese and Indian economies are leading top global investment banks to buy farmland in a bid to embrace the physical commodities market. Open interest in the No 11 raw sugar market decreased by 6,033 lots to 986,844 contracts open as of March 12. On Wednesday, futures volumes slowed to 70,927 lots.

Copyright Reuters, 2008

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