Raw sugar futures reeled from investor liquidation to end sharply lower Friday after rallying to near a three-year high, with brokers saying the market may consolidate close to a key support level next week. The July raw sugar contract slid 0.52 cent, or 3.36 percent, to finish at 14.95 cents per lb.
It traded from 14.92 to 15.53 cents. Volume for the July reached 63,772 lots at 1:55 pm EDT (1755 GMT). October sugar fell 0.47 cent to end at 15.78 cents. "The market lost momentum," said Alex Oliveira, senior sugar analyst for Newedge USA in New York. * Expectations of robust Indian buying were disappointed when it failed to materialise, he said.
Larry Young, an analyst for brokers Infinity Futures in Chicago, said it had been a "stellar week" for sugar when it hit close to a three-year high at 16.03 cents. He said investors were now "taking money off the table" and this seemed poised to continue. Oliveira said sugar market players would now watch the spread between front July and second position October.
A widening of that spread may indicate soft demand for sugar over the short term, said Oliveira. The trade took note of news that the International Sugar Organisation said in a preliminary forecast the global sugar deficit in 2009-10 will stand at 4.5 to 5.0 million tonnes, from a 7.8 million tonne deficit in 2008-09. Technicians put resistance in the July at 15.50 and 16 cents. Support in July should be at 14.90 and 14.50 cents.
Volume traded Thursday in the No 11 sugar market was 96,008 lots, from the prior 121,733 lots - the exchange said. Open interest in the No 11 sugar market was at 697,591 lots as of May 14, from the prior 688,369 contracts - exchange data. The No 14 sugar contract showed the July contract up 0.11 cent at 21.55 cents at 1:57 pm volume on Thursday in the No 14 domestic sugar market was at 259 lots, against the previous 562 lots ,exchange.