New York sugar banks on trade buying

Raw sugar prices settled higher on Monday as trade buying and a recovery in commodities buoyed the market even though the long-term fundamental outlook for sugar is bearish at this time, brokers said.
The New York Board of Trade's March raw sugar contract climbed 0.41 cent, or 3.7 percent, to end at 11.48 cents per lb., trading from 11.21 to 11.60 cents. May add 0.34 cent to 11.66 cents. The rest gained 0.27 to 0.32 cent.
James Corridor of Liberty Trading Group said the key March contract would "have to break through 12 (cents) to confirm" the market has established a bottom in its recent trading.
Fundamentally, sugar will have to contend with a supply glut in 2006/07 and analysts are wary that commodity, hedge and pension funds, which powered the sweetener to a 25-year high, will continue to short-sell the market. Those holding bullish views, however, believe the market has already digested all the bearish news and feel a recovery should start soon.
Raw sugar futures popped higher at the start, inspired by trade buying in the London white sugar market, dealers said. Producer sales quickly stepped in at the top of the range, but renewed trade and speculative buying led the market back from its lows for the session.
"Based on the way we closed, we should probe higher tomorrow. We could see this stay in a real wide range between 11 and 12 cents," a broker said. Technicians see support for the March contract at 11 and 10.50 cents, with resistance at 11.60 and 12 cents. Volume before the close stood at 35,689 lots, up from the previous count of 29,596 lots.
Call volume reached 4,099 lots and puts amounted to 3,444 lots. Open interest in the No 11 raw sugar market rose 994 to 426,306 lots as of October 6. No deals were done in the ethanol market. US domestic sugar prices ended mixed. The November contact lost 0.12 cent to 20.33 cents per lb. and January rose 0.05 cent to 20.30 cents. The rest ranged from 0.05 cent lower to 0.10 cent firmer. Volume before the end of business hit 228 lots, down from the prior tally of 773 lots.