Raw sugar futures closed higher on Wednesday on buying by small investment funds and a lack of interest is seen keeping the market range-bound in the days ahead, brokers said. The ICE Futures May electronic sugar contract went up 0.10 cent to end at 12.24 cents per lb, trading from 12.17 to 12.45 cents.
"I think we're in a range at this time between 12 and 12.50 (cents, basis the May contract). It looks like it's just going to hang around there for now," a financial house dealer said.
Like other commodity markets, the sugar market has been pummelled violently this month. At the start of March, raw sugar values hit a 19-month top and then sank in a liquidation orgy by investment funds to trade at an 11-week low.
The market's fundamentals prompt several analysts to say that it should grind higher given high crude prices, which could tempt producers to use more cane to manufacture ethanol. Demand has also steadily risen and will continue to do so this year.
The market popped up to the session highs on modest fund buying, but the lack of interest and follow-through buying undermined the move, dealers said. "We're now in the process of backing and filling. This consolidation phase may continue for a few more days until we get to the rollover phase (in the May contract)," one said. In consumer news, the market took note of news that Tunisia plans to import about 140,000 tonnes of raw sugar in 2008 but high prices may trim its expected purchases.
Early this month, Tunisia bought 28,000 tonnes of raw sugar at $372 per tonne C&F for April/May shipment. Technicians feel support in the May contract would be at 12 cents, with resistance pegged at 12.50 and then 13 cents. Volume traded in the May contract was at 29,174 lots at 1:22 pm EDT (1722 GMT). Total deals done last Tuesday was at 88,363 lots.
Open interest in the No 11 raw sugar market rose 3,556 lots to 938,200 contracts as of March 25. The US electronic domestic No 14 sugar market showed the May contract up 0.03 cent at 20.58 cents at 1:23 pm. Volume traded in the No 14 market on Tuesday was at 210 lots, the exchange said.
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