London sugar futures closed stronger on Tuesday on trade and fund buying in good volumes amid continuing concern over rain-induced delays in the cane harvest in Brazil and on improving prospects for ethanol demand, traders said.
Front month August closed up $3.0 at $221.5 a tonne, having moved between $222.0 and $218.2, in volume of 4,287 lots.
October settled up $2.5 at $226.0 in brisk volume of 1,372 lots.
"It is trade and fund buying. Volume is reasonably good," one trader said.
Concern over the rain-induced delays to harvesting in Brazil, and possible increased demand for cane-derived ethanol as a result of soaring oil prices, were seen helping to underpin the market.
Talk that Libya was seeking to buy between 50,000 tonnes and 250,000 tonnes of white sugar for July/September shipment, also helped boost market sentiment, traders said.
"The buying in New York is spilling over to London," one trader said.
Other traders pointed to arbitrage activity between the London August contract and New York July.
The August-July whites-over-raws premium traded at around $64, traders said.
Traders talked of prospects for increased demand for ethanol amid surging oil prices as US oil prices leapt to a record $42 a barrel on Tuesday after an attack in Saudi Arabia by Islamic militants killed 22 people, heightening fears about political instability in the world's biggest oil exporter.
In fundamentals, Russia may cut white sugar imports to protect domestic producers from excessive imports, a spokesman for the Economic Development and Trade Ministry said on Monday.
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