Raw sugar futures settled sharply lower on Wednesday on investor fund sales as fear demand could be hit by global economic weakness acted as a millstone on the market, brokers said. The March sugar contract sank 0.53 cent, or by 4.5 percent, to finish at 11.18 cents per lb, at the bottom of its 11.16 to 11.75 cents band. May sugar lost the same, finishing at 11.41 cents.
Volume traded in the March contract hit 32,719 lots at 2:12 pm EDT (1812 GMT). "Everything is down today. People are worried about demand and this could be an issue on many markets, although one would not think that the current levels need to get worked over any more," said Jack Scoville, vice president of brokers at the Price Group in Chicago. Sugar crawled up to its high for the day, but came under relentless pressure from investors dumping the market, dealers said.
Some brokers said that consumer interest may have been seen at the market's lows. "Weakness in the stocks (are) not helping attitudes," said Scoville. Consumer interest came from Egypt, which bought 46,000 tonnes of raw sugar from top producer Brazil. India recently bought 350,000 tonnes of raw sugar from Brazil and may be in the market for up to 800,000 tonnes more. The brokers are closely watching the US, which some believe will eventually be in the market to purchase sugar.
They point to a report by the US Agriculture Department which said the country's stocks-to-use ratio stood at 6.0 percent from 4.6 percent in last month's data, an indication that supplies may be tight. Technicians feel support in the March contract at 11 cents, with resistance at 12.30 and 13 cents.
Volume Tuesday in the No 11 sugar market at 66,527 lots - exchange data. Open interest in the No 11 raw sugar market gained 3,418 lots to 674,397 lot as of October 14 - ICE Futures US. The domestic No 14 sugar market showed the January contract up 0.01 cent at 21.50 cents at 2:12 pm volume traded Tuesday in the No 14 market was at 1,118 lots, the exchange said.