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CSCE sugar sinks to poor close, seen probing lower

NEW YORK: CSCE sugar futures stumbled to a poor finish on Tuesday after speculative fund selling into stops pounded raws, with prices expected to come off further on expectations of further speculative and origin sales.

"The bears are in control here," said Prudential Securities softs analyst Arthur Stevenson. "There's ample supply out there and the funds are moving to the minus side (of the market). I think the market's going to go down further."

Futures lost ground from the start, with speculative fund sales eating through the light scale-down trade support seen in the market, floor sources and sugar brokers said.

"It cannot even get up to unchanged levels. It simply does not look very good," a veteran floor dealer said.

March sugar settled down 0.16 cent at 5.29 cents a lb, the lowest close for a benchmark contract since June 1, 1999, when it ended at 5.24 cents. Its finish was barely above its intra-day low of 5.28 cents. The session peak stood at 5.44.

Sugar futures have plunged 13.27 percent since starting the year at 6.10 cents. March is now within striking distance of its lifetime low of 5.06 cents and may be working toward the 13-year nadir of 3.93 cents set on April 28, 1999.

Second-position May SBKO fell 0.18 to 5.51 cents and the rest retreated 0.12-0.03 cent.

Traders said the absence of any pickup in buying so far by top importer Russia, coupled with pressure from a Thai tender on Jan 27 to sell 292,000 tonnes of quota B raw sugar, will dampen any recovery in sugar.

"There's some more origin sales on the way and it's getting a bit late in the day for some of them to price in their sugar," a physical broker said.

"It's obviously (a) negative" situation, added Stevenson.

Analysts said upcoming harvest pressure from origins like Cuba and Thailand will put more obstacles in the way of a rally in sugar prices.

Raw sugar futures should continue to fall and March sugar will likely slide to between 4 and 5 cents a lb over the next few months, according to a weekly report issues Tuesday by Prudential Securities.

After trading between 5.62 and 6.28 cents since early December 1999, March sank on substantial fund selling and negative sentiment spawned by talk of Russian cancellations and expectations for large-scale Thai sales, said Stevenson.

In Prudential's long-term sugar outlook issued last November, March was projected to decline to 4 to 5 cents within the next three months.

"We are maintaining that objective," said Stevenson.

Technicians said the next level of support for March sugar would be at 5.10, the contract nadir of 5.06 and the psychologically important 5.00 cents mark. Resistance would be at the chart gap between 5.62-5.65 cents.

Estimated volume reached 25,208 lots against the previous estimated total of 19,218 contracts.

Call option turnover was estimated at 6,190 lots against the previous estimated total of 7,589 and puts were calculated at 5,675 from an estimated at 3,565 lots.-Reuters