Raw sugar futures settled lower on Monday on late speculative selling in moderate business, brokers said, adding that switch trade from investors moving positions out of the spot contract is expected to speed up this week.
The March electronic sugar contract fell 0.09 cent to trade at 12.26 cents per lb at 1:34 pm EST (1834 GMT), moving from 12.01 to 12.47 cents, with traded volume in the contract at around 35,737 lots. The March open-outcry contract slid 0.18 cent to end at 12.17 cents per lb, dealing from 12.03 to 12.47 cents. May shed 0.16 to 12.70 cents. Back months lost from 0.03 to 0.12 cent.
"Everybody's waiting for the roll to kick off in earnest. You had early fund buying and then the specs and the trade beat it down late. I think the spreads become the main thing this week," a dealer for a brokerge house said. The process of rolling positions in the open-outcry March sugar contract would see open interest fall 10,784 lots to 391,930 lots as of February 1. The March contract goes off the board on February 29.
One major investment bank is due to begin rolling its positions in sugar from Wednesday and the process could take up to a week to complete. Fundamentally, the market is seen working its way higher because investment funds believe sugar is undervalued when compared to other commodities and remains ripe for a short-covering rally.
Technicians feel support in the open-outcry March contract was at 12 and 11.50 cents, with resistance at 12.60 and 13 cents. Open interest in the No 11 raw sugar market climbed 7,381 lots to 1,043,032 contracts as of February 1.