Raw sugar futures reeled from speculative sales and switch dealings to end on Wednesday at their lowest level in more than two years, and a glut could pressure the market in the weeks ahead, brokers said.
The New York Board of Trade's key July raw sugar contract declined 0.11 cent to finish at 8.45 cents per lb, trading from 8.55 to a new lifetime low of 8.37 cents. It was the lowest close for sugar since it ended at 8.40 cents on May 18, 2005.
October sugar lost the same to 8.81 cents. The rest lost from 0.05 to 0.12 cent. On the IntercontinentalExchange's NYBOT electronic market for sugar the July contract fell 0.07 cent to 8.49 cents at 1:21 pm James Corridor, an analyst for brokers Liberty Trading Group, said the combination of switch trade and speculative liquidation was keeping the market under the gun.
"It will put pressure on sugar until July is out," he said, referring to expiration of the contract on June 29. Sugar futures have buckled from the fact that record cane crops are coming out of top grower Brazil. The trade, however, took note of news that Brazil will raise the blend of ethanol in gasoline to 25 percent from 23 percent on July 1. On switches, investors continued to liquidate positions in the spot contract. As a result, open interest in July dove 27,012 lots to 166,174 lots as of June 12.
Analysts have said that sugar prices may slide all the way down to 8.00 cents in the months ahead, due to the Brazilian harvest and an exportable surplus of sugar from India, the world's biggest consumer of the sweetener. Technicians pegged support in the July contract at 8.20 and 8.00 cents, with resistance at 8.74 and 9.00 cents. Open-outcry volume around noon was 26,056 lots, down from the previous tally of 39,150 lots.
Call volume was 8,153 lots and puts 8,002 lots. NYBOT said on Tuesday's screen trade were 107,525 lots and total volume was 146,675 lots. Open interest in the No 11 raw sugar market sank 14,699 lots to 688,475 lots as of June 12. The ethanol market was unthreaded.
US domestic sugar prices ended flat to firmer. The September contract rose 0.03 to 21.28 cents per lb., while November added 0.09 to 21.15 cents. Two contracts aside, the rest were flat to up 0.04 cent. Screen volume traded on Tuesday in the No 14 sugar market hit 54 lots and there were no lots traded in the pit. On the electronic No 14 sugar market, the September contract rose 0.07 to 21.32 cents at 1:22 pm.