Raw sugar futures finished at a six-week low Friday as fears over the global economy deflated the sweetener to scupper, for now, a rally which catapulted the sweetener this week to a 29-year top, analysts said. The March raw sugar contract sank 1.47 cents, or by 5.32 percent, to settle at 26.17 cents per lb. It was the lowest close for sugar on the spot daily charts since before Christmas.
On the week, March fell 12.47 percent since ending at 29.90 cents last Friday. The contract traded from 28.05 to 25.78 cents, the lowest level on the spot intra-day charts since late December. The volatility of the market could be seen in the highs and lows it hit this week.
On Monday, sugar hit a 29-year peak of 30.40 cents. The Friday session low of 25.70 cents represents a fall in value of 15.46 percent from Monday's top. Volume traded in March reached a whopping 112,638 lots at 1:58 pm EST (1858 GMT). Daily volume the last few sessions in the spot contract did not approach 100,000 lots.
"You can call the guy for a tombstone for the rally," said Sterling Smith, an analyst for brokers Country Hedging Inc in Minnesota. He said the close below a key support level at 26.70 cents meant the rally in sugar was over for now. The catalyst for the selling spree are worries over euro zone debt problems, especially in Greece.
"It's really going to come down to what they do with Greece ... to calm the frayed nerves," Smith said. Weakness in other markets like crude and stocks put a lot of pressure on sugar - traders. The strong dollar contributed to sugar's weakness.
For sugar, the question would be if the fall is enough to encourage cash buying by importers at these levels. Support in March contract seen at 26 and 25 cents. Resistance at 28 to 30 cents. Total volume Thursday reached 180,237 lots, compared with the previous 159,989 lots - ICE data. Open interest in the No 11 sugar market at 879,341 lots as of February 4, from prior 878,769 contracts - ICE.
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