Raw sugar futures closed easier on Wednesday on investor sales as the market consolidated, with analysts saying another rally is possible given the bullish fundamentals in the sweetener. The July raw sugar contract shed 0.25 cent to conclude at 15.38 cents per lb.
The contract traded from 15.17 to 15.67 cents. Volume traded in the July contract reached 57,433 lots at 2:09 pm EDT (1809 GMT). October sugar fell 0.21 cent to end at 16.32 cents. The performance here was matched in London, where the August white sugar contract fell $1.30 to close at $435.80 per tonne. "Sugar is going to move higher," said Jack Scoville, senior analyst for brokers the Price Group in Chicago. "It rejected the down move yesterday and now is congesting," he said.
Brokers said the main factors boosting sugar would be the temptation amongst producers to churn out more of the alternate fuel ethanol given high crude prices. There is also India, which is importing a significant amount of sugar due to a domestic shortfall in production.
Fundamentally, the market took note of news that Brazil's cane crush from the key center-south region has raced ahead of last year's pace. The crush has reached a record 43.25 million tonnes by May 1, versus 21.43 million tonnes by the same time last season, the Cane Industry Association said. Technicians put resistance in the July contract at 16 cents. Support in July should be at 15 and 14.90 cents.
Volume traded Tuesday in the No 11 sugar market was 115,758 lots, from the prior 94,697 lots - the exchange said. Open interest in the No 11 sugar market was at 708,649 lots as of May 19, from the prior 708,253 contracts - exchange data. The No 14 sugar contract showed the July contract up 0.03 cent at 21.92 cents at 2:09 pm volume on Tuesday in the No 14 domestic sugar market was at 76 lots, against the previous 299 lots - exchange.