Raw sugar futures settled easier on Tuesday on investor sales as it tracked lower crude values and lingering worries a recession would damage demand for the sweetener, brokers said. The key March raw sugar contract fell 0.20 cent to finish at 11.80 cents per lb. Trading from 11.64 to 12.07 cents. May sugar dropped 0.18 cent to 12.12 cents.
Volume traded in the March contract reached 34,115 lots at 2:01 pm EST (1901 GMT). "It's just going with the flow," a dealer for a major brokerage house said. He said currency fluctuations and the movement of global equity and commodity markets continue to influence sugar.
"I think sugar is still looking at the other markets and is hostage to them. I think this situation will not change until the end of this year," a trading house dealer said. On a fundamental level, many in the market feel they need to monitor if the US will import more sugar this year.
The US Agriculture Department said the stocks-to-use ratio now stands at 8.3 percent, from 6.0 percent in its October report. USDA announced import orders for 300,000 short tons of sugar last August. "The stock-use situation has improved, but the number is still below what the USDA is comfortable with. We'll see if it can get over 10 percent next month," a trader said.
In market news, the International Sugar Organisation cut its 2008/09 global sugar deficit forecast to 3.6 million tonnes from a previous forecast deficit of 3.9 million tonnes. The ISO forecast the deficit in 2009/10 at 4.5 to 5.0 million tonnes. Indian Sugar Mills Association Director General Shanti Lal Jain told Reuters that India's sugar output will fall below a forecast of 20 million tonnes due the late start of cane crushing in key regions.