Raw sugar futures closed sharply higher on Tuesday on continued July/September switching ahead of the front month's Friday expiration and on speculative buying, brokers said.
"We're rolling a hundred percent instead of just getting out of July. They are rolling and purchasing everything that they're getting out of and it's quite bullish to the market right now," said James Cordier, head trader of Liberty Trading Group.
New York Board of Trade's benchmark October sugar contract surged 0.27 cent or 2.9 percent to settle the open-outcry session at 9.71 cents per lb, trading in a wide band from 9.47 to 9.82 cents. The rest jumped from 0.14 to 0.20 cent.
The market consolidated on higher ground after Monday's losses. The second-month position came close to hitting a 2-1/2-month high. While follow-through commercial buying from the previous day provided early support, short-covering and speculative buying helped to buoy prices throughout the session, dealers said.
Meanwhile, Intercontinental Exchange's NYBOT electronic platform for sugar showed the October contract up 0.25 cent at 9.69 cents at 1:24 pm EDT (1724 GMT). Open interest in the July contract fell 8,979 lots to 50,418 lots as of June 25. July goes off the board on June 29.
"Now that we finally have decent market action. Anyone, you know, end-user nations that have been on the fence, this can pull them off the fence and get them to make purchases," Cordier said, projecting there would be follow-through buying on Wednesday.
If key October breaks through 9.83 cents, it will have the potential to reach 10 cents, a level last seen April 9 for the second-month contract, dealers said. Open-outcry volume around noon was put at 12,544 lots, down from Monday's tally of 22,101 lots. Call volume was 13,247 lots and puts 8,430 lots. NYBOT said Monday's screen trade was 69,129 lots and total volume 91,230 lots.
Open interest in the No 11 raw sugar market fell 5,615 lots to 668,275 lots as of June 25. No deals were done in the ethanol market. US domestic sugar prices closed mostly unchanged. The September contract was flat at 21.45 cents per lb while November eased 0.02 cent to 21.08 cents. The rest were steady. Screen volume traded Monday in the No 14 sugar market hit 25 lots and 1 lot was traded in the pit. The electronic No 14 sugar market saw the September contract flat at 21.45 cents at 1:23 pm.
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