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The Linn Group

Sugar hits 29-year high

AgFax.Com - Your Online Ag News Source

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January 19, 2009 – Sugar futures hit a 29-year high Tuesday as the market remained focused on lower crops in Brazil and India. March sugar settled up 136 points at 28.98 cents per pound. The May contract rose 114 points to close at 27.52 cents per lb.

Late in the session, March sugar topped its previous life-of-contract high of 28.95 cents on Jan. 7, peaking at 29.06 cents. This is the highest level for a front-month contract since January 1981.

Most analysts said sugar's rise was not due to breaking news so much as the market continuing to factor in a bullish supply/demand picture India plans to extend a sugar-stockholding limit imposed on bulk consumers by six months to November in order to discourage hoarding and to check prices that have risen sharply over two months is a sign of tight supplies throughout the country.

The current limit, imposed in September 2009, prohibits bulk consumers from keeping more than 15 days of their average sugar requirement. India, the world's largest consumer, is expected to produce around 16 million metric tons in the year ending Sept. 30, while annual demand is around 23 million, with output also less than once expected in Brazil.

Prices attracted additional buying as key technical levels were hit, In particular. Open interest increased by 631 positions Friday to total 834,018. In options trading, there were approximately 21,219 calls and 14,166 puts changing hands.