Raw sugar futures finished sharply lower Wednesday on investor liquidation and the momentum from the sell-off could further deflate sweetener values in the days ahead, brokers said. The March raw sugar contract dropped 0.88 cent, or by 3.6 percent, to settle at 23.12 cents per lb.
Trading range from 22.96 to 23.90 cents. March volume was at 54,264 lots at 1:52 pm EDT (1752 GMT). James Cordier, analyst for brokers optionsellers.com, said sugar was hit by long liquidation and the market seems poised to probe the area near 22 cents, basis March.
He said earlier worries over excessive rains in top grower Brazil appear to be easing. The market had rallied to its highest level in nearly 30 years because of a poor cane crop in top consumer India. India was forced to import significant amounts of sugar and the bullish outlook was bolstered by offtake from other countries as well. The market took note of news that the Thai Cane and Sugar Corp will open a tender to sell 120,000 tonnes of 2010/11 raw sugar next week.
Analysts said the market will take a look at the monthly US Agriculture Department's monthly supply/demand data to gauge the outlook for the US sweetener market. They said the trade will take a look at the stocks-to-use ratio for the US sugar market because it will be used by the USDA in determining possible additional sugar imports.
Technicians believe support in the March contract would be 22.50 and 22 cents, with resistance at 24 and 25 cents. Volume traded Tuesday in the No 11 sugar market was at 78,702 lots, from the prior 44,096 lots - exchange data. Open interest in the No 11 sugar market was at 771,265 lots as of October 6, from the previous 773,850 contracts - exchange data.