The contract traded from 28.68 to 29.82 cents, the highest level since January 1981. It was also the third straight session the market had set a 29-year high. Volume traded in March reached 70,414 lots at 1:46 pm EST (1846 GMT). Sterling Smith, an analyst for Country Hedging Inc in Minnesota, said the market is "finding a little resistance" the closer it gets to 30 cents, basis March.
The market "could be vulnerable to a correction if we do not take out 30 (cents)" said Smith. Sugar gyrated wildly hitting a 29-year top at 29.82 and hten plunging to the day's low at 28.73 cents before roaring back to wind up in positive territory. "Buy-backs by the funds were again a feature of trading. Once it got down to the lows, the funds jumped back in again," a trader said.
Sugar remained bullish due to tight supplies, strong demand and buying by investment funds who feel the market has room to roam higher. Traders said news of the failure of a tender in Indonesia does not change the fact the country needs to import sugar. A key think-tank in Moscow said Russian raw sugar imports are seen rising 66 percent to at least 2.4 million tonnes in 2010 after it lowered its tariff.
Other buyers in the months ahead are the Middle East, the United States and the Philippines. Technicians see support in the March contract at 28 and 27 cents, with resistance at 30 and 32 cents. Total volume Wednesday reached 133,618 lots, compared with the previous 127,437 lots - ICE data. Open interest in the No 11 sugar market stood at 839,341 lots as of January 20, versus the previous 839,354 contracts - exchange data.