Raw sugar slumps below 2-month high in late selling spree

Monday, 23 January 2017 00:10 - - {{hitsCtrl.values.hits}}

NEW YORK/LONDON (Reuters): Raw sugar prices on ICE fell sharply from a two-month high in heavy volume on Thursday, spurred by selling of the March/May spread and a flurry of technical sell signals, forming a potentially bearish flag on the charts.

March raw sugar settled down 0.8 cent, or 3.8%, at 20.18 cents per lb, its steepest one-day tumble in more than six months with volume at an exceptionally heavy 103,474 lots.

This created an outside reversal lower, a potentially bearish chart formation when the contract opens above the prior session’s high but settles below its low. The contract rose to a two-month high at 21.38 cents earlier.

“It started with selling of the March/May spread. That triggered selling in the flat price,” one U.S. trader said, adding that the recent rally had been “overdone.” The March contract swung to a discount to May for the first time since October 2015. It fell as low as a 0.06 cent discount in sharp contrast from the prior session’s 0.18 cent premium, potentially indicating a lack of concern about nearby supplies.

This spurred technical selling in the March contract, around the 100-day moving average and 50% Fibonacci retracement level, both around 21 cents, with additional sell stops below, traders said. March white sugar settled down $11.80, or 2.2%, at $530.70 per ton.