Raw sugar futures crumbled from speculative sales and switch trade to finish lower on Tuesday as excessive supplies were expected to keep the sweetener on the defensive over the next few sessions, brokers said. New York Board of Trade's key July raw sugar contract fell 0.20 cent to close the open-outcry session at 8.56 cents per lb. after trading from 8.52 to 8.66 cents.
The finish matched the close on June 5 when sugar prices settled at a two-year low. October sugar dropped 0.13 to 8.92 cents and the rest retreated 0.02 to 0.14 cent.
The IntercontinentalExchange's NYBOT electronic platform for sugar showed the July contract down 0.22 cent at 8.54 cents at 1:17 pm EDT (1717 GMT). "It's unbelievably oversupplied," said Marquis Sonnet, an analyst for trading firm Sonnet and Co "I think it will be a gradual decline to 8.00 cents" for the benchmark month.
Sugar prices have fallen sharply since scaling a more than 20-year peak at 19.73 cents in February 2006. That rally spurred increased plantings and the result has been bumper crops which have driven down prices. The weakness in sugar has been aggravated by switch trade as commodity indexes rolled positions out of the spot month which will expire at the end of the month.
As a result, open interest in the July contract sank 37,532 lots to 193,186 lots as of June 11. Sugar futures lost ground from the bell before a late flurry of trade and suspected consumer buying served to pare some losses, dealers said.
Sonnet said technical areas where sugar could break down further were being closely watched. Technicians pegged support in the July contract at 8.50 and 8.20 cents, with resistance at 8.74 and 9.00 cents.
Open-outcry volume around noon was at 25,912 lots, versus the previous tally of 47,356 lots. Call volume was 7,943 lots and puts 7,515 lots. NYBOT said on Monday's screen trade were 136,089 lots and total volume 183,445 lots.
Open interest in the No 11 raw sugar market dove 12,912 lots to 703,174 lots as of June 11. No deals were done in the ethanol market. US domestic sugar prices ended mixed.
The September contract increased 0.01 cent to 21.25 cents per lb. while November was flat at 21.06 cents. One contract aside, the rest were flat too. Screen volume traded on Monday in the No 14 sugar market hit 53 lots and there were no lots traded in the pit. On the electronic No 14 sugar market, the September contract rose 0.06 cent to 21.30 cents at 1:18 pm.