Raw sugar futures ended lower on Friday in another session dominated by switch trade as players transferred positions out of the spot contract since it is due to go off the board this month, brokers said. The October raw sugar contract eased 0.11 cent to settle at 12.54 cents per lb.
The trading range was 12.40 to 12.84 cents. March sugar slipped 0.25 cent to finish at 14.20 cents. Volume traded in the October contract hit 50,370 lots at 1:55 pm EDT (1755 GMT). Jack Scoville, vice president of brokers the Price Group in Chicago, said the strength in the dollar and weaker crude values pressured the sweetener. Sugar has been linked to crude because spikes in oil prices could tempt producers like top grower Brazil to use more cane to churn out the biofuel ethanol.
"Sugar must be a currency and crude play, because I have not seen anything real bearish to drive it down otherwise," said Scoville. He said sugar should be supported by expected losses from Hurricane Gustav in cane areas of Louisiana, the No 2 sugar cane producer in the country.
There are also worries powerful Hurricane Ike could hit Florida, the top US sugar cane producer. Analysts said any losses there may force the US to order fresh imports of sugar. "I kind of expected a better performance today than what we are getting as I think there was some damage in Louisiana from Gustav and Florida could get hammered by Ike next week, but there you go," said Scoville.
On a fundamental level, brokerage and consultancy Kingsman revised its forecast for the 2008/09 global sugar balance to a 3.8 million tonne deficit from its previous forecast of a 3.3 million tonne surplus. Kingsman referred to downward revisions for production in the world's top growers - Brazil and India - and rising consumption for China and India.
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