Raw sugar prices ended mostly higher on Friday on trade and speculative buying, but most analysts felt the market would likely sag further from commodity fund and speculative liquidation going into next week.
The New York Board of Trade's October raw sugar contract eased 0.01 cent to conclude at 14.76 cents per lb., trading from 14.75 to 14.95 cents. On a spot basis, it was the worst close for sugar since ending at 14.71 cents on June 14. March added 0.01 to 15.22 cents. The rest added from 0.01 to 0.05 cent.
Judy Ganes of commodity firm J. Ganes Consulting said sugar may be in more losses, if the key October contract falls below an area of support around 14.55 and then 14.00 cents.
"It can get down there," she said. Fundamentally, the recent spike in prices to near 25-year highs in early February has stoked increased sowings of cane and supplies are expected to rise in 2006/07.
The wildcard in the equation would be if a rally in the crude oil market prompts producers like top grower Brazil to funnel more cane into the manufacture of the alternate fuel ethanol.
Floor sources said sugar prices headed higher at the start but speculative liquidation capped the advance and led the market to its lowest level for the session. Late short-covering gave sugar a mild boost into the close of trade, they said. "We got a small bounce because everybody's been a little short. We won't see a breakdown today, but it's probably going to be next week," one said. Technicians feel support for the October contract at 14.55 and then 14.00 cents. Resistance was at 14.86 and 15 cents.
Final estimated volume at the close stood at 36,449 lots, against the previous 58,679 contracts. Call volume touched 17,846 lots and puts hit 6,539 lots. Open interest in the No 11 raw sugar market climbed 2,299 lots to 466,277 lots as of July 27. The ethanol market was untraded.
US domestic sugar prices ended sharply lower. September plunged 0.95 cent to 20.75 cents per lb. and November sank 0.85 to 21 cents. The rest tumbled 0.42 to 0.84 cent. The market took note of news that the US Agriculture Department has set the fiscal year 2007 sugar import quota at 1.48 million short tons, raw value, and the decision was taken "due to unprecedented disruptions to the US sugar market."
US sugar production has been battered by hurricanes Rita and Wilma, which struck the prime cane growing areas of Louisiana and Florida, respectively, last year. Final estimated deals in the market stood at 1,294 lots, up from the prior tally of 715 lots.