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CSCE sugar ends at 8-1/2 mth low, more losses seen

NEW YORK: CSCE sugar futures closed at an 8-1/2 month nadir Tuesday, battered by all-around sales which sent the two front months reeling to new contract lows with the prospect of further falls a distinct possibility.

"It was (a) speculative and technically induced (sell-off)," said Refco Inc. softs analyst Ann Prendergast.

"We're on the defensive again," added Prudential Securities analyst Arthur Stevenson. "This remains a negative market."

Key May SBK0 dove to a new lifetime low of 5.20 cents before settling 0.10 off at 5.30 cents a lb. The session peak was at 5.48 cents.

It was the lowest level for benchmark sugar since it settled on June 1, 1999 at 5.00 cents. The close in May equalled the finish seen on June 3. On April 28 of last year, sugar touched a 13-year low of 3.93 cents.

Front March sugar SBH0 stumbled as well to a new low of 5.04 cents before closing at 5.13 cents, off 0.08. It traded to a high of 5.31 cents.

July retreated 0.11 to 5.60 cents, October dipped 0.05 to 6.02 cents and the rest were 0.04 cent easier each.

Early speculative shortcovering after a soft start allowed sugar to bob up to its highs for the day, but upside momentum swiftly dried up and the market got hammered anew, floor sources said.

Trade, commission house and fund selling ran the market past downside stops before finally bouncing near the lows, they said.

"That was probably trade buying," said Prendergast, referring to the way sugar futures came back.

Brokers said March will likely slip below the psychologically important 5.00 cents mark over the next few days and that this will likely affect the May contract as well, especially with the spot month going off the boards on February 28.

Traders said there may be a short-lived rebound in the market but the overall tone indicates a further move south, given plentiful supplies and weak import demand.

Technically, they said support in May should be at the new contract low of 5.20 and in layers to 5.00 cents. Resistance was pegged at the session peak of 5.48 cents and then the overhead gap of 5.62-5.65 cents.

Estimated volume traded in the CSCE sugar market reached a robust 45,126 lots from the previous estimated total of 37,005 lots.

Call volume touched an estimated 9,503 lots while put volume reached around 4,962 lots.-Reuters