NYBOT raw sugar futures crumbled from late fund selling to finish on Monday near a one-month low, with follow-through sales seen nudging the market lower in the days ahead, brokers said.
March sugar slid 0.20 cent or 2.24 percent to settle at 8.73 cents a lb, dealing between 8.69 and 8.98 cents. It was the worst close for sugar on a spot basis since finishing at 8.39 cents on September 29, 2004.
May drop 0.18 cent to 8.88 cents. The rest retreated 0.10 to 0.16 cent. "The funds are the only ones who can bomb this market and that's what they did going into the close," a dealer for a brokerage house said.
While longer-term market fundamentals would tend to point to higher prices due to a supply/deficit in 2004/05, high freight rates may deflate sentiment by sidelining potential buyers of the sweetener, the analysts said.
The key March contract established a trading band from 8.91 cents to 8.98 cents for most of the session, but once the contract slipped below 8.85 cents, automatic computer sell orders kicked in and pounded sugar, brokers said.
"The trade tried to support it at 8.85 (cents, basis March), but we should try lower given how badly we closed today," one said. Technicians believe support in the March contract would be in the region of 8.55/58 cents, then 8.50 cents.
Resistance would now be at 8.78 and 8.90 cents. The next target would be the area around 9.09 and 9.14 cents. Traders said estimated volume before the market closed for the day hit some 18,059 lots, from 14,642 lots previously.
Call volume at that time hit about 6,313 lots while puts stood at 7,230 lots. Ethanol futures closed unchanged with the November contract closing at 104 cents a gallon. US domestic sugar prices ended mixed on Monday.
January sugar added 0.05 to 20.45 cents a lb and March shed 0.01 to 20.44 cents. The rest ranged from 0.01 cent firmer to 0.03 cent easier. Traded volume just before the market concluded business hit over 412 lots, from 1,091 lots previously.
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