Raw sugar prices set a low for the year on Wednesday but edged back to above unchanged by the close on industry buying, and market sources see a rally in coming trading sessions.
The New York Board of Trade's October raw sugar contract edged up 0.05 cent to close at 14.04 cents per lb, after trading between a seven-month low of 13.88 cents and 14.19 cents.
March added 0.10 to 14.60 cents, while back month contracts rose 0.13 to 0.23 cent. On Tuesday, the benchmark contract hit a bottom of 13.92 cents before closing at 13.99, the lowest spot close for the contract since January 3.
Floor sources said that on Wednesday's market was boosted by light midsession trade buying, which should continue in the coming sessions. "Trade houses did a little buying, looks like some producer buy-backs down around the low 13.90s," one trader said. "We're building a base in sugar, and I think we're about to rally," said James Corridor of Liberty Trading Group. "We have specs trying to push the market down and we had good commercial buying yesterday and today.
October sugar prices have plummeted to new lows since the beginning of July, but market sources have noted that the contract has stayed in relative highs since it broke above 14 cents last December. Corridor said that continued higher energy prices should build commercial demand in the ethanol market. "Energy prices are going to steal away all the sugar into ethanol unless we raise the price of it as a food," he said.
Technicians pegged support at 13.65 and 13.60 cents in the coming sessions, with resistance at 14.25 cents. NYBOT final estimated volume reached 73,418 lots, up significantly from Tuesday's 58,200 contracts. Open interest in the October contract rose 1,725 lots to total at 472,069 as of August 8. The ethanol market was untraded.
Meanwhile, US domestic sugar prices ended mixed. November eased 0.05 cent to 21.40 cents and January added 0.15 cent at 21.35 cents. The rest were up 0.05 cent or down 0.03 to 0.14 cent. Final estimated market volume was at 268 lots, considerably lower than on Tuesday's official 953 lots.
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