ICE raw sugar futures closed at a 3-1/2-week low on Friday amid further liquidation pressures in the agricultural commodity markets, erasing more than 15 percent of the sweetener's value since Monday.
"I think it's just the overall market tones and feeling that you're pricking some of the speculative excesses, be it coffee, cocoa, sugar, or cotton, that may have been apparent," said Steve Platt, futures analyst with Archer Financial Services in Chicago.
"That is leading to some pretty active spec liquidation pressure." The ICE Futures May electronic sugar contract hit a session trough of 12.77 cents a lb, before ending the day down 0.24 cent to 13.36 cents, its lowest settlement since February 13.
By 1:53 pm EST (1853 GMT), the contract was down 0.44 cent, or 3.2 percent, to 13.16 cents. Sugar prices have been on a steady decline since hitting 19-month highs above 15.00 cents on Monday, but analysts believe the rally is far from over.
"I am still not convinced that sugar is over, but you certainly have to work through some of the negative possibilities of liquidation coming from some of these funds," Platt said. Technicians peg support in the May contract at 13.00 cents, followed by 12.50, while resistance was seen at around the 13.80 to 13.85 level, followed by 13.90.
On the production front, harvesting of Brazil's center-south 2008/09 cane crop has started in Parana, where output is expected to be 10 to 11 percent larger than last season, state mills association Alcopar said on Friday. Open interest in the No 11 raw sugar market declined by 10,041 lots to 1,004,727 contracts open as of March 6.
On Thursday, futures volumes totalled 132,143 lots. The US electronic domestic No 14 sugar market showed the May contract down 0.01 cent to 20.82 cents by 1:54 pm Volumes on Thursday reached 112 lots, the exchange said.