Raw sugar futures settled near a 30-year high Thursday when a late investor buying spree wiped out the losses caused by a strong dollar, with analysts saying the bullish outlook in the market should drive values up in the days ahead. The March raw sugar contract climbed 0.49 cent to conclude at 26.43 cents per lb. Based on the monthly charts for raw sugar, it was the highest close for sugar since February 1981.
March traded from 25.46 to 26.80 cents, the loftiest intra-day mark for sugar on the weekly charts in Reuters Data since February 1981. Volume traded in March hit 67,827 lots at 1:58 pm EST (1858 GMT). Jack Scoville, an analyst for brokers The Price Futures Group in Chicago, said the dollar's surge to a 3-1/2 month high versus the euro undermined sugar as did other commodities. "It's mostly dollar-related," he said.
But the market remains well supported given tight global supplies and the severe impact heavy rains have had on Brazilian supplies. "(Sugar) has become decidedly bullish," said Scoville. Analysts said the pullback was fairly shallow and raw sugar values remain poised to mount another rally. "I don't think anybody is ruling out that we go past that high today and make a run toward 30 cents," one said.
Also supporting sugar is the prospect of steady demand from countries like No 1 consumer India. Other sources of offtake are Russia, Pakistan, Indonesia and even the United States. Technicians feel resistance in March sugar would be at 27 and then up to 30 cents. They pegged support in March at 25 and 24.50 cents. Total volume Wednesday hit 127,781 lots, compared with the previous session's 172,492 lots - ICE data. Open interest in the No 11 sugar market stood at 822,236 lots as of December 16, versus the previous 819,140 contracts - exchange data.
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