Raw sugar futures settled easier on Thursday on modest investor sales in a session halted by a 3-1/2 hour power outage at the exchange, brokers said. The key July sugar contract fell 0.05 cent to end at the day's low of 11 cents per lb, with the day's high at 11.23 cents. Volume traded in the contract was at 32,248 lots at 3:52 pm EDT (1952 GMT).
"It was pretty much an inside session. We were picking up a little before trading got interrupted. Maybe we can consolidate and see what happens tomorrow," a dealer for a major financial house who follows sugar said. For weeks, raw sugar prices have been tracking the oil market, surging when energy prices spike and tanking when crude tumbles.
Sugar has followed crude due to widespread belief that increases in oil would tempt producers like top grower/exporter Brazil to manufacture more of the alternate fuel ethanol rather than sugar. Fundamentally, the market is looking at a modest deficit in 2008/09 of between 1.0 and 2.0 million tonnes, but market analysts believe two years of excess supplies will weigh on values.
Demand is expected to expand this season, but high freight rates and the performance of the dollar will influence sugar going forward, the analysts explained.Volume traded Wednesday in the No 14 sugar market reached 255 lots, the exchange said.