Raw sugar futures ended lower Friday on investor sales and liquidation as the market seems to be probing the lower end of its trading band, brokers said. The March raw sugar contract slid 0.33 cent to conclude at 22.43 cents per lb. The contract traded from 22.31 to 23.07 cents.
March contract volume traded was at 38,850 lots at 1:49 pm EST (1849 GMT). Sugar saw "some follow-through selling from yesterday," Jack Scoville, an analyst for brokers The Price Futures Group in Chicago, said. The market has been in a band running from 21 to 26 cents for several weeks - analysts. Some market participants believe sugar should see a further decline next week from technical pressure.
Off the day's lows, Scoville said sugar is seeing "some spec short covering...along with a bit of consumptive buying." But others feel bullish fundamentals will keep losses in check and predict a fresh rally especially when supplies become tight in the first quarter of 2010.
Sugar is supported by the poor cane crop in India caused by the worst annual monsoon rains in 37 years. As a result, India spot sugar prices hit a fresh record high Friday due to delays in the new crushing season and a supply deficit for the second year in a row. India has already said there is still a shortfall of 3.0 million to 4.0 million tonnes of sugar for its sugar market.
Another factor in favour of higher prices are excessive rains in top grower Brazil which hindered the harvest there. Technicians feel resistance in the March contract is at 24 and 24.50 cents, with support at 22 and 21.50 cents. Volume traded Thursday in the No 11 sugar market was at 96,046 lots, from the prior 67,155 lots - exchange data. Open interest in the No 11 sugar market was at 782,883 lots as of November 5, from the previous 782,478 contracts - exchange data.