--- Prices up 1.8pc on week, rises for third straight week
--- Technical buying continues, volumes low
Speculative investors had piled back into the niche market on Tuesday after prices broke above a short-term trendline at 74.5 cents per lb Rallies may only be temporary, though, due to producer selling and profit-taking by speculators. "We'll stay up around 75 cents. That will be a good opportunity to be taking profits," said Sean McGillivray, head of asset allocation at Great Pacific Wealth Management in Oregon. Volumes were low, with just under 8,700 lots of March contracts changing hands on the day.
Prices may remain range-bound at higher levels. "We're going to be limited (in range) at least for the next few weeks. We're in full-on holiday trade now," McGillivray said. Concerns remain about sluggish global demand, a record surplus and Beijing's stockpiling policy. China's strategic reserve is expected to control half the world's inventory by the end of the current marketing year.
Unsettling the market further was US data released on Thursday that showed a drop in weekly export sales to a six-week low, raising fears among some investors that recent stronger demand from abroad, particularly from top producer and consumer China, has ebbed. A broadly neutral monthly crop report from the US Department of Agriculture provided some relief earlier in the week. Containing only a few changes, it was viewed as a sign that the market fundamentals that had been deteriorating had stabilised.