Raw sugar futures settled on Tuesday at a 2-3/4 year high on investment fund buying, with brokers saying the market may move higher due to bullish chart patterns and fundamentals. The July raw sugar contract gained 0.13 cent to end at 15.15 cents per lb. Based on the spot closing charts, it was the highest finish for sugar since late July 2006.
The contract traded from 14.73 to 15.27 cents. Volume traded in the July contract reached 64,194 lots at 2:00 pm EDT (1800 GMT). October sugar rose 0.18 cent to end at 15.72 cents. "They're (investment funds) so in love with sugar now," said James Cordier, an analyst for brokers optionsellers.com in Florida.
"It looks like (a move to) 16 cents is a done deal," he said, adding funds stepped in during a brief pullback earlier in the session. Traders said expected buying by India of up to 3.0 million tonnes of sugar in 2009 is a primary supporter of the market. The delivery of 842,252 tonnes of raw sugar against the expired May raw sugar contract was seen as bullish because most of the sugar is believed to eventually be bound for India.
The market may also get a boost from potential purchases by Pakistan, Indonesia and possibly China, brokers said. Technicians believe resistance in the July contract is at 15.50 and 16 cents. Support in July should be at 14.50 and 14 cents. Volume traded Monday in the No 11 sugar market was at 63,082 lots, from the prior 140,050 lots - the exchange said.
Open interest for No 11 sugar market was at 667,038 lots as of May 4, from the prior 659,286 contracts - exchange data. The No 14 sugar contract showed the July contract down 0.10 cent at 21.40 cents at 2:02 pm volume on Monday in the No 14 market was at 226 lots, against the previous 20 lots - exchange data.