Raw sugar futures closed higher Tuesday, with the market extending its recent rally on reports of excessive rain drenching the cane crop in top grower Brazil and talk of possible imports from Mexico, brokers said. The March raw sugar contract soared 0.84 cent, up 3.48 percent on the day, to end at 24.94 cents per lb. Trading range from 24.28 to 25.15 cents. March volume was at 71,485 lots at 2:15 pm EDT (1815 GMT).
Spot October sugar rose 0.91 cents to finish at 23.46 cents. James Cordier, analyst for brokers optionsellers.com in Florida, said sugar has proven to be one of the few commodities that has shown resilience and enduring strength. He said a close in the days ahead over 25 cents in the benchmark March raw sugar contract would "look pretty friendly."
But he also cautioned that sugar is getting top heavy and overbought, especially since open interest in the No 11 world sugar market has fallen steadily the past few sessions. Open interest in the No 11 sugar market was at 786,272 lots as of September 28, from the previous 788,262 contracts - exchange data. Many analysts said rains which have disrupted the cane harvest in top grower Brazil stoked the rally.
Another factor bolstering sugar is talk that Mexico would need to book more sugar imports. Industry officials in Mexico said the country has a deficit of 481,000 tonnes of standard and refined sugar, which should be covered by authorised imports. Sugar dealers are also looking at deliveries against the tape when the October raw sugar contract expires tomorrow.
Open interest in the October contract stood at 39,424 lots as of Monday, down 15,850 lots from the previous session. By the close of trade on Tuesday, brokers believe open interest was down to around 25,000 to 30,000 lots. Technicians feel resistance in the March contract is at 25 and 26 cents, with support at 24 and 23 cents. Volume traded Monday in the No 11 sugar market was at 138,020 lots, from the prior 95,769 lots - exchange data.
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