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CSCE sugar ends up, touches fresh 8-month nadir

NEW YORK: CSCE sugar futures settled modestly firmer Thursday when late local buying lifted raws after they fell earlier in the session to a fresh eight-month low.

Brokers said the market appeared to have taken a breather after diving on Wednesday due to robust fund sales into stops, with exceedingly bearish fundamentals adding to the pressure, dealers said.

"It's pointing lower. It's taking a breather after the penetration of the December low (of 5.62 cents), but there's no reason to believe the market's not going down," said a physical broker for a New York-based trading house.

Key March SBHO ended up 0.04 cent at 5.49 cents a lb after trading 5.53 to 5.40 cents, which matched the lowest intra-day price set on May 4. The contract tumbled Wednesday to end 0.22 lower at 5.45 cents.

May SBKO rose 0.08 to end at 5.77 cents. The rest gained the same, except for July which increased 0.07 to 5.97 cents.

Sugar opened on a steady note, with trade buying of nearby months giving futures a modest pop as the market regrouped after its steep selloff, floor brokers said.

Trade house ED & F Man was said to be a noted buyer of March and May (contracts) in the market, they said.

"But residual fund selling and the talk of Russian defaults combined to drive the market back down to its lows. Late local shortcovering allowed us to recover," another broker said.

Physical dealers said talk of Russian defaults would be expected after the plunge in futures and was said to be running in the neighbourhood of a few thousand tonnes.

"They bought too much sugar and they don't have the money to keep it in inventory," one said.

With physical offtake from other destinations slow, top importer Russia was seen as the main outlet for excess supplies struggling to find homes.

Analysts said plentiful supplies of sugar and weak offtake has led to a burdensome buildup in stocks which will hang like a millstone around the neck of sugar futures over the foreseeable future.

Technicians said the next level of support for March sugar would lie at the 5.10 cents mark and the psychologically important 5.00 cents level. Resistance should be at the 5.62 cents level which represented previous support.

Estimated volume reached 20,708 lots against the previous estimated total of 39,633 contracts. Call option turnover was estimated at 3,764 lots and puts were estimated at 2,703.

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