ICE sugar hits 5.5 month high before hitting resistance
Published: 11/15/2017, 8:01:54 AM
Raw sugar futures on ICE edged back up to the previous session's 5-1/2 month high on Tuesday before the climb stalled at a key band of resistance, according to Reuters.
March raw sugar was down 0.02 cents, or 0.1%, at 15.11 cents per lb by 1408 GMT after equalling Monday's 5-1/2 month peak for the front month of 15.18 cents.
Dealers said the market was struggling to break above resistance around the March contract's peak in September of 15.20 cents. A break above that level could trigger a fresh wave of fund short covering.
"The spring is coiled. Whether we will get there (above 15.20 cents) is the question," one dealer said.
The March contract hit 15.20 cents on Sept. 15 and the following day there was a session high of 15.19 cents while this week on both Monday and Tuesday there were peaks of 15.18 cents.
Dealers said the recent run-up in prices has been driven partly by a rise in energy prices which is leading Brazil to use more cane to produce ethanol at the expense of sugar.
Dealers said the switch would curb sugar production in Brazil and reduce the size of a widely anticipated global surplus in the 2017/18 season.
"We are not talking about the disappearance of the surplus but we are talking about a reduction," one London dealer said.
March white sugar rose by US$1.00, or 0.25%, to US$395.00 a tonne.
The December contract, which expires on Wednesday, saw its premium to March widen slightly.
Brazilian sugar is likely to be tendered and there could also be supplies from Central America, the European Union and Ukraine, dealers said.