Raw sugar futures settled lower on Thursday due to producer and investor sales as the market backed away from a rally to a three-week top, with brokers uncertain where sugar will head next. The key March raw sugar contract retreated 0.24 cent to finish at 11.85 cents per lb. The contract traded from 11.73 to 12.35 cents.
May sugar lost 0.23 cent to finish at 12.11 cents. Volume traded in the March contract hit 40,835 lots at 2:06 pm EDT (1806 GMT). "Rallies in bear markets are very sharp, very quick, (and) with very short life spans," said Sterling Smith, vice-president for brokers FuturesOne in Chicago.
He said sugar was "backing and filling" after its strong surge in the previous session. But the lack of follow-through buying early in the session "created some problems" for the sweetener, Smith said. Fundamentally, most in the trade fret about the impact of demand on sugar prices.
Traders said the inability of the March contract to close over 12.09 cents may prompt some to unload their holdings. Another factor dictating price movement will be the performance of world equities and commodity markets.
"No one is going to be aggressive in the market given the uncertainty we are still seeing in there," a dealer said. The market is also waiting to see if the US will buy sugar because of tight supplies. Sugar production was hit by hurricanes in Louisiana and Texas, but American sugar producers said supplies are ample.
Technicians feel support in the March contract at 11.80 and 11.50 cents, with resistance at 12.25 and 12.50 cents. Volume Wednesday in the No 11 sugar market at 91,348 lots - exchange data. The domestic No 14 sugar market showed the January contract down 0.48 cent at 20.20 cents at 2:07 pm volume traded Wednesday in the No 14 market was at 115 lots, the exchange said.
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