By Allen Sykora
Of DOW JONES NEWSWIRES
Sugar futures finished with a marginal loss Monday, unable to hold onto early gains from weakness in the dollar and strength in other commodities, with some longs exiting positions and perhaps some traders starting to focus on expectations for a larger crop next year.
March sugar settled down 2 points at 22.41 cents per pound. The May contract finished 12 points lower at 21.33 cents.
The market tended to be higher more often than not during the course of the day.
"Sugar found underlying support due to the weakness in the dollar," said Boyd Cruel, senior softs analyst with Vision Financial Markets.
Just ahead of the sugar close, the December dollar index was down 0.741 point to 75.078. Sugar had trouble hanging onto gains, however.
"We're seeing long liquidation and the market is going through a little correction," Cruel said. This may have been prompted by a lack of fresh bullish news since the market was at the 24- to 25-cent level this fall, he added.
Bob Haberkorn, senior market strategist with Lind-Waldock, said sugar's consolidation rather than an uptick with other commodities could be worrisome.
"It's a bearish signal that it couldn't get any lift off of a weak dollar and strong crude," he said. "It has traded flat."
Haberkorn looks for sugar to ease down the road on expectations that increases are coming in global production in 2010 after the 28-year highs high in prices earlier this year.
"There's going to be a lot of sugar, and don't forget the front month that people are trading is March," he said, meaning they are now starting to factor in next year's production.
"It's been so overbought," he added.
As of the settlement, March sugar had posted an inside day in which the high and low were contained within Friday's range, although since the low has dipped marginally below Friday's low.
Haberkorn put major support for March sugar at 21.50 cents, then 20.25. "That's pretty far [away,]" he said. "But sugar can move really quickly."
He listed resistance at 23 cents and 23.75.
ICE world sugar open interest-the number of active positions left at the end of the session-decreased by 8,988 lots Friday to total 773,895, according to exchange data.
Electronic sugar volume Monday was estimated at 110,199 lots as of 2 p.m. EST (1900 GMT). In options, approximately 10,696 calls and 5,435 puts were traded, according to exchange data.
Close Change Range
March 22.41 down 2 22.29-22.90
May 21.33 down 12 21.23-21.87
-By Allen Sykora, Dow Jones Newswires; 541-318-8765; allen.sykora@dowjones.com
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(END) Dow Jones Newswires
11-09-09 1426ET
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