CSCE raw sugar futures ended on Tuesday at a 7-1/2 month high on relentless speculative fund buying, with the sweetener seen edging higher in the days ahead, brokers said.
CSCE may sugar jumped 0.14 cent, or by 2.04 percent, to conclude at 7.01 cents a lb, moving from 6.91 to 7.04 cents.
It was the highest close for sugar since trading above 7.25 cents in August 2003.
July gained the same to 6.93 cents. The rest increased 0.09 to 0.12 cent. "It looks very good," said James Cordier of Liberty Trading Group.
"We hit our target (of 7.00 cents, basis May) so we'll see what happens next."
Sugar popped higher from the bell as fund buying ate through scale-up trade selling to finally breach the psychological target of 7.00 cents, floor sources said.
"I don't think we're done. The funds keep buying the sugar and the trade keeps selling it," one said. Fundamentally, the market looks friendlier due to expected lower output in key producers India and Thailand.
Top grower Brazil, which is expecting another record cane crop in 2004/05, may get its production trimmed due to drought.
Analysts said, however, that they are concerned that the funds, which are net long in the last Commitment of Traders' report by nearly 40,000 lots, may be primed for a setback.
"If this thing stalls, we could see it drop from some of the weak longs liquidating their positions," one explained, adding the total hefty open interest in the No 11 sugar contract of 294,335 lots is also worrisome because the rally may be overdone.
Technicians said resistance in May was at 7.10 cents, followed by the region around 7.25/32 cents. Support was at 6.85 and then 6.75 cents.
Estimated volume just before the market closed for the day hit 46,592 lots, against the previous tally of 40,413 lots. Call volume stood at 13,516 lots while puts hit 4,723 lots.
US domestic sugar futures ended higher on Tuesday. May sugar added 0.04 to 20.93 cents a lb while July rose 0.03 to 20.95 cents. Except for one contract, the rest went up 0.01-0.04 cent.
Estimated volume prior to the market's close touched 442 lots, from 882 lots previously.
The CSCE is a subsidiary of the New York Board of Trade.
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