Sugar futures rose more than 1 percent in New York on Tuesday, following a rebound in most commodities, and traders predicted milder gains in the near term as output rises.
The New York Board of Trade's July raw sugar contract climbed 0.23 cent to settle at 16.62 cents a lb, trading between 16.47 and 16.67. October jumped 0.28 cent to $16.88 cents.
"It obviously reacted in sympathy with the rest of the commodities," said Mike McDougall, senior vice president at FIMAT. "But funds didn't participate much and the market is still stuck between 16 cents and 17 cents."
Sugar is down 15 percent since hitting a 25-year high of 19.72 cents on February 3. Dealers said it may take a while for the market to reclaim that peak with producers rushing to add supply due to generally better prices than a few years back.
India, the world's largest sugar consumer, will add 16 percent to 2006/07 production, bringing in 22 million tonnes from 19 million tonnes in 2005/06, an industry official told Reuters at a sugar conference in Istanbul on Monday.
"We're seeing the same recovering trend in production in Thailand, China and potentially Pakistan, partly because of better weather and partly because of weak that are making other farmers switch to sugarcane growing," said McDougall.
Dealers said the market could ride out the present corrective phase faster if demand for the biofuel ethanol stays strong at a time of high crude prices and top grower Brazil uses more of its cane to manufacture that alternative fuel.
Another supportive factor is the elimination of European sugar exports although a recent weakening of Brazil's currency, the real, has encouraged imports to offset that, dealers said. US domestic sugar prices remained under pressure.
July fell 0.14 cent to end at 22.86 cents a lb while September slid 0.10 to 22.85 cents. The rest were down to 0.03 to up 0.08 cent. Estimated volume was 48,850 contracts, down from 57,362 on Monday.
Call option volume was estimated at 16,445 against on Monday's 19,190 with puts at 12,312 versus 11,051 contracts.
Comments
Comments are closed.