Benchmark raw sugar futures edged down on Friday, extending this week's 8-1/2-month low on light follow-through speculative selling and limited demand for the physical commodity, traders said.
New York Board of Trade's raw sugar contract for October delivery slipped 0.02 cent to settle at 12.18 cents per lb after trading from 12.12 to 12.40 cents inside the previous day's trading range.
Still, it was the contract's weakest settlement since November 30, 2005. "It was an inside day. But I think the market is a little vulnerable to a sell-off," said a sugar trader, speaking from the NYBOT sugar pit. "I think 11.96 (cents/lb) is the next stop and a breach of 11.96 will get us down to 11.60," he said.
Among other contracts, March eased 0.02 cent to end at 12.84 cents and back months concluded flat to up 0.04 cent. "It was light volume today," said Michael McDougall, a senior vice president at Fimat USA. "There has been some physical interest at these levels because we dropped quite a bit," he said, pointing out the market has fallen about 30 percent since July.
On the weather front, US forecaster Meteorlogix on Friday predicted "generally favourable conditions" for the sugarcane harvest in No 1 producer Brazil. "Dryness is of concern to the late maturing crop," it said.
"The near-term availability, the quick harvest and the record yields have swamped any kind of concern about futures production but it's something is not clarified yet," said McDougall. James Corridor, president of Liberty Trading Group, said the market appeared to be about 2 cents under fair value because he expects large consuming nations China and Russia to enter the market later this year.
"Ever since this bear trend has begun there hasn't been any cash business done in importing nations," he said. "They (Russia and China) will be in (the market) either late in the third quarter or the fourth quarter and that should push values back up to 14 cents," he said.
Trading futures volume reached an estimated 35,878 contracts, said a trader. That compared with the 70,726 lots officially tallied the previous session. Open interest in the No 11 raw sugar market was last recorded at 479,752 contracts. No deals were done in the ethanol market. US domestic sugar prices firmed the most along the front end of the curve. November rose 0.05 to 21.10 cents per lb, while January gained 0.15 cent to 21.20 cents. The rest ranged from 0.10 cent up to down 0.08 cent. Volume traded before the end stood at 22 lots.
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