Raw sugar futures settled firmer Wednesday on buying by small investors as the market appears to be consolidating after its recent sharp sell-off since scaling a 29-year peak in February, brokers said. May raw sugar contract rose 0.27 cent to end at 16.16 cents per lb. Trading range from 15.72 to 16.30 cents.
May volume at 35,560 lots at 1:59 pm EDT (1759 GMT). Last week, contract touched 11-month low at 15.46 cents. "It's due for a short-covering pop," said Sterling Smith, an analyst for brokers Country Hedging Inc in Minnesota. Since hitting a 29-year top at 30.40 cents on February 1, the market has nearly halved in value in posting its worst quarterly loss since 1985.
While some investors fear further weakness in sugar, demand from May onwards should provide support for the sweetener. Smith said the selling spree was overdone, as was the rally, which took it to highs not seen since 1981. Many players are keeping an eye on rains in Brazil, concerned about a recurrence of excessive rains that disrupted Brazil's cane harvest in 2009.
Other major market mover would be India. Expectation would be for normal monsoon rains in world No 1 consumer India. Past two monsoons have been deficient, causing India's sugar production to get hit in the process. Technically, support in the May contract seen at 15.50 and 15 cents. Resistance pegged at 17 and 17.50 cents. Volume traded Tuesday hit 98,328 lots, versus the previous tally of 65,539 lots - ICE data. Open interest in No 11 sugar was at 703,555 lots as of April 6, from the prior tally of 700,859 lots - exchange data.