New York sugar closes strong, recoups day losses

Raw sugar prices regained nearly all of their day losses on Thursday, with some funds and speculators buying back what they sold in the corrective move lower on Wednesday, traders said.
"Yesterday was a lot of spec liquidation and there was not much in the market to cause the selling other than massive stops-loss sell orders getting hit below the market," said one sugar trader.
"We're simply retracing the price action from the previous week," he said. The New York Board of Trade's October raw sugar contract ended 0.22 cent higher at 10.47 cents a lb., after climbing to a high at 10.48.
On Wednesday, October sugar tumbled to its lowest level since September 8 as it corrected an overbought condition. But on Tuesday, the contract hit a new high at 10.57, its highest spot basis close since October 20, 2000. Active March finished on Thursday with 0.19-cent gains at 10.68 cents, in a range between 10.55 and 10.69. The rest settled 0.08 to 0.13 cent higher.
Traders said sugar fundamentals remain sound and suggest sugar prices should continue to go higher.
"But a shake-up was certainly due and that's what we had yesterday," a trader said.
"The market's been extremely long for quite a while and it was just a technical sell-off yesterday. I think we're getting back to the fair value, where we were trading in the week. The market's still underpinned by strong fundamentals," said James Corridor, president of Liberty Trading. London sugar prices led the gains.
White sugar futures there were bought heavily by speculators after a European Union 2005/06-production quota cut came in slightly below market expectations.
An EU announcement of a 1.8 million tonne 2005/06 sugar production quota cut was below the anticipated 2.0 million tonnes. Nervousness over the announcement has weighed on prices as the market became concerned that the EU would unleash millions of tonnes of refined sugar into the export market. Estimated closing volume stood at 59,079 lots, down from the previous 149,804 lots. Call volume amounted to 5,113 lots and puts were 2,162 lots.
Technicians still see resistance in October sugar at the contract high of 10.57 cents. Support was pegged at Wednesday's low of 10.15 and in layers down to 10.00 cents.
On Wednesday's open interest in No 11 raw sugar fell by 18,158 lots to 468,780 lots as of September 21. Ethanol futures finished unchanged at 275 cents a gallon on the September contract.