NYBOT raw sugar futures settled mixed on Tuesday, with sustain producer selling nudging key March lower, and brokers said the sweetener may slide further from follow-through sales in the days ahead.
March sugar slipped 0.02 cent to close at 8.93 cents a lb, trading from 8.85 to 9.05 cents. May fell 0.03 to 9.06 cents. Except for one contract, the rest finished flat to 0.01 cent firmer.
"We got blasted by some producer selling," a veteran floor dealer said.
Fund buying pushed the key March contract up at the start, but it stalled when exporters from Brazil and Thailand dumped sugar futures. Losses were pared when trade buying, reportedly led by Cargill, and speculative short-covering came in, dealers said.
Traders said the market may slide on further producer sales and if funds liquidate positions in sugar in the coming sessions. Open interest rose 120 lots to hefty 338,615 lots as of October 18.
One senior trading house analyst said the key March contract could test the 8.80 level and if it falls below that, the next target would be 8.56/59 cents. But most of the trade believes the longer term outlook for sugar is bullish due to a supply deficit in 2004/05 and stronger levels of consumer buying from nations like India, the world's biggest consumer of sugar whose cane crop is suffering from drought.
Technicians put resistance in the March contract in the region of 9.09 to 9.14 cents, followed by 9.40 and 9.75 cents. Support lies at 8.90 and then down to 8.78 cents.
Estimated volume just before the market closed for the day hit 27,952 lots, down from 40,163 lots on Monday. Call volume at that time hit 6,299 lots while puts reached 5,417 lots.
Ethanol futures closed higher, with November up 5.00 cents at 109 cents a gallon. US domestic sugar prices ended mixed. January was flat at 20.29 cents a lb and March eased 0.01 to 20.40 cents.
The rest were flat to 0.01 cent weaker. Traded volume just before the market concluded business hit 17 lots, down from 73 lots previously.