Raw sugar futures closed on Monday at a 1-1/2 week low as speculative sales depressed the market although operators said trade and consumer buying could spark a rebound later in the week.
The New York Board of Trade's March raw sugar contract sank 0.50 cent or by 4.0 percent to finish at 11.76 cents per lb, ranging from 11.73 to 12.25 cents. It was the lowest close for sugar on a spot basis since settling at 11.47 cents on November 22.
May fell 0.44 to settle at 11.76 cents as well. Back months lost from 0.07 to 0.32 cent. "They pushed it below 12 (cents, basis March) and touched off some (automatic sell order) stops. We could slip a bit more on follow-through (selling), but my feeling is that it will eventually rebound when the trade buying shows up," a brokerage house dealer said.
Analysts have said the longer-term prospects of sugar prices may be bearish due to a supply glut, with many merchants pegging a surplus in excess of 5.0 million tonnes for the 2006/07 season.
Sugar futures slipped at the start as steady speculative and commodity fund selling gradually eroded values. For a while, the market held above 12 cents, but once the contract slipped below that level, sell-stop orders kicked into punch the market sharply lower, dealers said. Technicians feel resistance for the March contract at 12. and 12.15 cents, with support at 11.50 cents.
Final estimated volume reached 61,418 lots, from the prior count of 47,113 lots. Call volume amounted to 11,725 lots and puts hit 12,231 lots. Open interest in the No 11 raw sugar market jumped 9,741 to 545,602 lots as of December 1. There were no deals in the ethanol market.
US domestic sugar prices ended mostly higher. The January contract rose 0.23 to 20.18 cents per lb and March added 0.13 to 19.93 cents. The rest ranged from 0.14 cent up to 0.38 cent lower. Final volume reached around 540 lots, from the previous count of 186 lots.