Raw sugar prices settled on Friday at a month high as trade and speculative buying sparked a market rally although brokers feel producer sales lurking in the wings may scupper the advance after a holiday break.
The market is shut on Monday for a holiday, with trading resuming on Tuesday. The New York Board of Trade's key July raw sugar contract soared 0.49 cent or by nearly 5.5 percent to end at 9.42 cents per lb., dealing between 9.08 and 9.43 cents.
It was the highest close for sugar on a spot basis since finishing at 9.61 cents on April 26. October sugar jumped 0.37 cent to 9.45 cents. Distant months gained from 0.19 to 0.27 cent.
On the IntercontinentalExchange's NYBOT electronic market for sugar, the July contract increased 0.46 cent to 9.39 cents at 1:31 pm. "We could see some follow-through, but I think the rally could be short-lived," a financial house floor analyst said.
"I think the producers will hit this after the holiday." An initial wave of trade and suspected consumer buying provided the initial impetus for sugar to jump at the start and once key July raced past the psychological 9.00 cents level, automatic buy orders kicked the market higher, dealers said.
"You had stops waiting at 9.00 (cents) and all the way up the chain. It'll be interesting to see if we can sustain this given how big supplies are," one said.
Traders said there also seems to be some nearby tightness for prompt delivery sugar since some feel top grower Brazil may churn out more of the alternative fuel ethanol than sugar given strong crude prices. Some switch business was also seen as players move positions out of the spot contract. Open interest in July fell 2,186 lots to 374,331 contracts as of May 24.
Technicians pegged support for the July contract at 9.00 and 8.50 cents, with resistance at 9.50 and 10 cents. Open-outcry volume around noon was at 23,889 lots, from the previous tally of 19,056 lots.
Call volume was 21,030 lots and puts 8,000 lots. NYBOT said on Thursday's screen trade were 63,105 lots and total volume 82,161 lots. Open interest in the No 11 raw sugar market climbed 4,760 lots to 757,915 lots as of May 24.
The ethanol market was unthreaded. US domestic sugar prices ended mixed. The July contract rose 0.06 to 21.44 cents per lb. while September eased 0.02 at 21.13 cents. The rest ranged from 0.15 cent higher to 0.08 cent softer. Screen volume traded on Thursday in the No 14 sugar market hit 291 lots and open-outcry deals amounted to 85 lots.