Raw sugar futures settled at a near-three-week high on Friday on trade and speculative buying on the back of news of a huge Malaysian physical purchase, dealers said. The New York Board of Trade's July raw sugar contract climbed 0.06 cent to 8.59 cents a lb., which was its highest close since May 2, after trading from 8.50 to 8.62 cents. Buying by commercial players and small investors and brokers continued for a second day in sugar as traders digested reports of the large physical order for raw.
"The trade was buying it, and the specs now are starting to take the market up too," a New York floor trader said. Scale-up trade selling and producer sales capped gains.
But traders felt the market looked strong technically with end-user buying and improved technical after raw vaulted 8.50 cents resistance on Thursday.
Investment funds are still heavily short in sugar, though, and traders saw plenty of room for short covering. Sugar traders said on Friday that Malaysia was thought to have bought a big chunk of its raw sugar import needs at least 400,000 tonnes and likely much more from two trade houses.
The deal was thought to have been at least partially hedged on the futures market, and that further such activity could yet take place, they said.
There was no official confirmation of the transaction. October sugar was up 0.10 cent at 8.69 cents. Back month contracts ended 0.06-0.11 cent higher. July/October spreads widened slightly to 10 points on Friday, from 7 points on Thursday. Brokers peg resistance in the NYBOT July contract at 8.65/70 cents and support at 8.50, 8.35/40 and 8.25/30 cents.
Estimated volume was 38,755 lots, against the prior day's 39,497 lots. Call volume reached 9,454 lots and puts hit 3,219 lots. Open interest in the No 11 raw sugar market fell 285 lots to 358,044 contracts as of May 19.
In industry news, Schultze Asset Management LLC, an investment advisory firm, offered to buy Imperial Sugar Co, one of the largest US refined sugar processors, for $17 per share, valuing the company at about $179.3 million.
Imperial Sugar did not immediately return a call seeking further comment. The company markets products under the Imperial, Dixie Crystals, Spiracles and Holly brands. US domestic sugar futures also rose. July gained 0.10 cent to 22.10 cents a lb. and September was up the same at 22.07 cents. Others were flat to up 0.11 cent. Volume reached 922 lots versus 931 lots previously.
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