Raw sugar futures closed on Tuesday at a week-low on speculative fund liquidation and the market may grind lower in the days ahead on follow-through pressure in the sweetener, brokers said. The New York Board of Trade's March raw sugar contract dove 0.27 cent or 2.93 percent to end at 8.95 cents a lb, moving from 8.91 to 9.05 cents. It was the lowest close for the contract since finishing at 8.90 cents on January 24.
May sugar fell 0.22 cent to 9.32 cents. Losses in back months ranged between 0.08 and 0.20 cent. "The market is correcting from its overbought condition," said James Corridor of Liberty Trading Group.
A fund-led rally, which hoisted sugar to its highest level in over three months, has stalled, the dealers said. Sugar prices may slip further as funds transfer positions out of spot March and into back months before the front contract expires at the end of the month.
Fundamentally, sugar's outlook remains bullish due to a supply deficit and robust consumer buying in the months ahead. But the recent rise and the sizeable speculative fund open interest in the market means players may need a longer amount of time to switch those positions into forward contracts.
Open interest in the No. 11 sugar market rose 3,053 lots to an all-time record of 427,831 contracts as of January 31. Ethanol futures ended unchanged with the February contract closing at 95 cents a gallon.
US domestic sugar ended mostly easier on Tuesday. March slid 0.17 cent to 20.36 cents a lb and may shed 0.04 to 20.56 cents. Except for one contract, the rest were flat to 0.03 cent easier.
Volume before the market closed amounted to 410 lots, up from 105 contracts previously.
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