Raw sugar futures settled Wednesday at a fresh 28-year peak on all-around buying sparked by the prospect of large imports by No 1 world consumer India, brokers said. The key October raw sugar contract shot up 1.05 cents, up 4.8 percent on the day, to finish at 22.97 cents per lb.
The close is the highest on the spot monthly continuation charts since early in 1981. Since ending at 11.81 cents at the end of 2008, raw sugar values have risen nearly 95 percent at Wednesday's close. The October contract moved from 21.50 to 23.33 cents. October contract volume hit 79,954 lots at 2:05 pm EDT (1805 GMT). March sugar gained 0.96 cent to end at 24.32 cents. "Sugar is still on a roll," said Jack Scoville, senior analyst for brokers The Price Futures Group in Chicago.
"The demand profile is holding up very well." The spark for the rally is the prospect of significant imports from India, whose cane crop has been battered by a weak monsoon. This was underscored by news that Jonathan Kingsman, head of consultancy Kingsman, when he told Reuters Television that Indian sugar output could be 17 million tonnes in 2009/10, down from a previous forecast of 19 million as a result of the poor monsoon.
Combined with weather-related delays in top grower Brazil and expectations of demand from countries like Pakistan and the United States, prices have taken off. Most analysts now expect prices of raw sugar to climb to 23 to 25 US cents per lb in the weeks ahead. Early losses from profit-taking and a correction after the searing rally sputtered out when the funds came back and began running sugar higher - dealers.
Technicians feel resistance in October is at 23 and 25 cents, with support pegged at 20 cents. Volume traded Tuesday in the No 11 sugar market was 169,018 lots, from the prior 221,218 lots - exchange data. Open interest in the No 11 sugar market was at 846,179 lots as of August 11, from the previous 839,721 contracts, exchange data.