Raw sugar futures sputtered to a lower close on Tuesday after rally stalled and the market was knocked down by late speculative fund sales, brokers said. The March electronic sugar contract sagged 0.08 cent to trade at 12.16 cents per lb at 1:28 pm EST (1828 GMT), moving from 12.09 to 12.73 cents, with volume in the contract at around 52,330 lots.
The March open-outcry contract closed down 0.04 cent at the day's low of 12.20 cents, with the session peak at 12.58 cents. May slipped 0.03 to 12.61 cents and back months-lost 0.04 to 0.09 cent. "Sugar has been mostly technical, although there was the usual producer scale-up selling on the way up," said Jack Scoville, vice president of Price Group in Chicago, adding that most of the run stemmed from "specs trying to force the market again."
Follow-through investment fund buying rocketed sugars higher, but the pace of producer sales picked up to cap the advance, dealers said. When sugar could not sustain its advance, some speculators who went along for the ride dumped their longs and the fall sped up as the selling intensified, they said.
Analysts said sugar would rally toward the psychological level of 13 cents because fund accounts believe the sweetener is undervalued compared to other commodities like corn and wheat, which have scaled multi-year peaks.
Switch activity has also picked up sessions as players move positions out of spot March before it goes off the board at the end of February, traders said. Open interest in the March raw sugar contract fell 8,842 lots to 436,607 lots as of January 28. Technicians put support in the open-outcry March contract at 12 and 11.50 cents, with resistance at 12.60 and 13 cents. Open interest in the No 11 raw sugar market rose 737 lots to 1,034,933 lots as of January 28.
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