Raw sugar futures slumped on Friday, ending at a four-month low on speculative sales and switch trade, and brokers expected more pressure on prices next week from investors getting out of the spot contract.
Market players welcomed the start of electronic trading in sugar, with one saying it should provide arbitrage opportunities in the weeks ahead. The New York Board of Trade's March raw sugar contract fell 0.13 cent to close at 10.50 cents per lb, dealing from 10.49 to 10.63 cents. On the spot daily basis, it was the lowest close for sugar since late September 2006.
May sank 0.15 to 10.67 cents. Back months were 0.12 or 0.13 cent softer. The IntercontinentalExchange's Nybot electronic platform for sugar saw its March contract trade at 10.50 cents at 1:20 pm EST (1820 GMT), while dealing from 10.49 to 10.63 cents. Electronic trading ends at 3:15 pm.
Steve Platt of Archer Financial Services in Chicago said sugar "could start to stabilise" since there is pretty steady support at the 10.50 cents area in the March contract. Traders said switch trade should pick up strongly as investors move out of positions in March before it goes off the board at the end of the month.
Open interest in the March contract fell 4,227 lots to 262,973 lots as of February 1 while interest in May increased 7,812 to 140,626 lots. Market fundamentals remain unchanged with consumer demand seen supporting the market at the lows and attention gradually turning to the start of the harvest of the main center-south cane crop in top grower Brazil in April.
Open interest in the No 11 raw sugar market rose anew as investors expanded their short positions in sugar, an indication they feel prices will slip lower over the longer term. Open interest in the No 11 raw sugar market soared 11,175 lots to 693,723 contracts as of February 1.
Technicians said support for the March contract was at 10.30 and 10 cents. Resistance was at 11 and 11.15 cents. Final estimated volume stood at 65,543 lots, from the prior count of 91,999 lots. Call volume stood at 4,698 lots and puts hit 3,349 lots. Electronic volume in sugar was seen over 6,000 lots at 1:00 pm, dealers said. Electronic trading ends at 3:30 pm.
The ethanol market was untraded. US domestic sugar prices ended higher. The March contract rose 0.25 to 20.60 cents per lb and May added 0.23 to 20.25 cents. The rest increased 0.24 to 0.29 cent. Deals before the conclusion of business amounted to 1,068 lots, from the previous tally of 275 lots. There were no quotes seen in the electronic No 14 sugar market.
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