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CSCE sugar skids to 9-mth low on fund sales, glut

NEW YORK: CSCE sugar futures fell four percent to a nine-month low under the psychological five cent a lb level on Friday, as funds fearing a glut reversed purchases which had buoyed prices in recent sessions, dealers said.

"It looks like some fund-type selling to me, then the locals started selling," said a CSCE floor broker.

Active May plunged 0.21 cent to a contract low close of 4.99 cents a lb after bottoming at 4.97 off a session high of 5.21 cents.

On a continuation basis, it was the lowest benchmark futures price since 4.87 cents was touched on May 4, 1999, the day after the International Sugar Organisation daily price struck a 13-year low of 4.78 cents.

Dealers said much of the activity was position juggling in the run up to the expiration on Monday of the on March contract, which fell 0.18 cent to 4.94 cents a lb.

The back of the board was down from 0.18 to 0.28 cent.

"Much of the position rolling is perhaps taken care off and the bearish fundamentals reasserted themselves," said Ann Prendergast, softs analyst at Refco Inc. "The market had been holding around 5.20/5.25, probably in the jockeying ahead of first (delivery) notice day and delivery concerns.

Open interest in March as of February 24 plunged 6,743 to 21,731 lots while May's open interest soared was up 5,831 at 103,395 lots.

"The weak action here may be telling us some fairly large deliveries are anticipated," said Prudential Securities analyst Arthur Stevenson. "We are also seeing disappointment in physical offtake. I think those are negative factors, bearing in mind that the sugar market has been under downside pressure for quite some time."

Weak physical offtake, coupled with excessive sugar stocks, has cast a pall over the market as the shipping season commences in key producers like Thailand, Cuba and Central America.

Particularly burdensome has been the ample rainfall in growing regions of top producer Brazil, analysts said.

"There is historic precedence for low prices in the March April period ahead of the Brazil harvest which will begin in may," Prendergast said. "I just think there is plenty of sugar."

Estimated final volume for sugar 11 was a strong 51,410 contracts, well above official turnover of 41,411 contracts on Thursday .

The CSCE is a subsidiary of the New York Board of Trade.-Reuters