New York raw sugar futures rose to a nine-day high on Wednesday, accelerating right before the close as extra buying kicked in once prices broke above the high. Benchmark October sugar at the New York Board of Trade settled up 0.25 cent, or 2.6 percent, at 9.83 cents a lb., having reached 9.87, the highest price since August 15, in the final moments of floor trade.
The raw market was strong all, but capped at 9.75 cents.
Trade and speculative buyers were emboldened by a lack of follow-through, after the key contract fell to a one-month low at 9.50 cents on Monday.
"The trade was in there buying today. I would have thought fund liquidation pressure would have continued. Open interest is just so massive," said Judy Ganes of J. Ganes Consulting.
March sugar went up 0.27 cent to 10.18 as funds rolled out of October long positions, in lieu of outright sales. The deferred contracts rose from 0.05 to 0.21 cent.
The economic picture looks good for sugar, because of strong consumer buying from Asia and the Middle East.
But excessive open interest, which rose 852 lots to 465,529 on Tuesday, and last week's near 160,000 contract net non-commercial long position make the market look top heavy.
Overnight, the Thai Cane and Sugar Corp (TCSC) said it sold 48,000 tonnes of quota B raw sugar for export in 2006 to the Kerry trading firm for shipment between March-May 15 at a 95-point premium over the New York Board of Trade raw sugar futures price.
A floor broker said that trader's thought that was a good price. "Thailand is happy and maybe that's reflected in the market here." On Wednesday's estimated volume were 50,411 contracts, twice on Tuesday's official 23,763 lots.
Sugar call option turnover was estimated at 3,226 contracts and puts at 1,965. In US domestic sugar trade on Tuesday, November went down 0.16 cent to 20.28 cents and January slipped 0.05 cent to settle at 20.40 cents.
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