London March white sugar futures settled over 2.50 percent higher on Tuesday after funds covered short positions in a flurry of afternoon buying, and traders said the market could see more upside on Wednesday. March closed at $254.80 a tonne, up 2.54 percent or $6.30, in heavy volume of 4,393 lots, after trading in a $254.90-248.50 range.
May ended up $5.50 at $262.50 in volume of 700 lots.
"Funds are buying in London. We think funds were short. March hit buy stops at $250 and $254," one trader said.
"A lot of this comes on the back of sharp rises in coffee and cocoa yesterday," he added. "We could see more buying tomorrow."
Some European traders said heavy rains in Brazilian sugar growing areas since Monday signalled harvest delays and strengthened the positive mood.
They also said a big sugar delivery to trader ED&F Man against the expiry of the Liffe December 2004 white sugar contract on Monday was a shot in the arm for the market.
ED&F Man, confident that it would find buyers for the sugar, took delivery of 1,915 lots, or 95,750 tonnes, of Brazilian sugar via its clearing agent ABN Amro Futures Ltd, one trade source said.
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