NYBOT raw sugar futures closed higher on Tuesday on trade buying as the market recovered from its slippage to a one-month low on Monday.
And brokers said the sweetener might work its way higher on follow-through buying on Wednesday. March sugar gained 0.12 cent to conclude at 8.85 cents a lb, dealing from 8.70 to 8.88 cents.
On Monday, the contract settled at 8.73 cents in the lowest close for sugar on a spot basis since ending at 8.39 cents on September 29. May gain 0.08 to 8.96 cents and the rest rose 0.03 to 0.07 cent.
"The trade did the bulk of the buying. It held the lows and the way we closed, we should inch up tomorrow. But I don't trust this market beyond 8.90 (cents, basis March). It's got trade supporting it below and overhead producer selling capping it above," an investment house dealer said.
The longer-term fundamentals are bullish given the supply deficit in 2004/05, although high freight rates has dented the appetite for the sweetener from consumers right now. Floor sources said follow-through sales knocked the market down to its lows for the day.
"It gradually worked its way up from there. The trade did the buying and the locals who were short got in as well to do some covering," one floor dealer said.
Technicians believe support in the March contract would be the region of 8.55/58 cents, then 8.50 cents. Resistance lurks at 8.90 cents, followed by the area around 9.09 and 9.14 cents.
Traders said estimated volume before the market closed hit 20,611 lots, down from Monday's count of 37,244 lots.
Call volume was about 4,155 lots while puts stood at 2,990 lots. Ethanol futures closed steady to higher, with November rising 41 cents to 145 cents a gallon. US domestic sugar prices ended mixed.
January settled flat at 20.45 cents a lb while March rose 0.01 to 20.45 cents as well. Except for one contract, the rest were flat to 0.05 cent firmer. Traded volume just before the market concluded business amounted to 1,176 lots, up from 431 lots previously.
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