Raw sugar futures in New York ended firm on Thursday as fund money boosted values and traders largely ignored a raised forecast for a world sugar surplus in 2006/07 from the International Sugar Organisation, sources said.
"I think this is a function of money coming into these managed funds which is also having a bearing. A lot of these markets have shown some real strength, be it coffee, cocoa, or sugar, and I think that is a function of the money that is coming into these commodity funds seeing them as an investment vehicle," said Steve Platt, an analyst with Archer Financial.
The New York Board of Trade's March raw sugar contract settled 0.22 cent higher at 12.18 cents per lb, a shade below its session peak at 12.19. The low was 11.86 cents. May rose 0.19 cent to 12.26 cents, while the rest ended 0.10 to 0.16 cent higher. The International Sugar Organisation on Wednesday raised its forecast for the world sugar surplus in 2006/07 (October/September) to 5.8 million tonnes, up from a previous projection of 2.2 million.
"The ISO numbers were pretty well discounted already. There was the expectation of a surplus developing this year the question becomes how much will move to ethanol?" said one broker.
On Wednesday, the ISO predicted the growing usage of ethanol as "green" fuel was unlikely to destabilise the world sugar market in the next five to six years. NYBOT final No 11 raw sugar futures volume was estimated at 64,232 lots compared with Wednesday's official count at 51,218 lots.
Call volume reached 10,509 lots, while puts hit 13,531 lots. As of November 8, open interest in the No 11 raw sugar market surged 9,418 to 497,318 lots. The ethanol market was untraded. US domestic sugar prices finished lower. The January contract closed down 0.11 at 19.54 cents per lb, while March eased 0.04 cent at 19.66 cents. Deferred or back months lost 0.02 to up 0.13. Final volume was estimated at only 106 lots.