20000126

CSCE sugar settles weakly, seen easing further

NEW YORK: CSCE sugar futures finished poorly on Monday, with key March matching an eight-month nadir set last week as producer pricing and all-around sales conspired to pound raws anew.

News that analysts from Prudential Securities and Salomon Smith Barney had forecast sugar prices eventually easing to the psychologically vital 5.00-cent mark immediately put the market on the defensive.

Benchmark March sugar tumbled 0.14 to end at 5.29 cents a lb, moving from 5.41-5.26 cents. The close matched the settlement it posted on Jan. 18, an eight-month low.

Friday, the contract lost 0.13 to close at 5.43 cents. Over the past two sessions, March has lost 4.85 percent of its value after it failed to fill an overhead gap from 5.62-5.65 cents.

Sugar prices faced immediate pressure from Thai and Brazilian origins engaged in pricing their sugar.

"The producers are still too far behind in their pricing and they did the bulk of the selling," a broker said.

Speculative long liquidation piled in as the market probed lower ground before small amounts of refiner-type buying enabled sugar to find some support, dealers said.

Stevenson said weakness in sugar futures came about due to a lackluster physical market, talk of Russian cancellations, large-scale pricing to be done by several origins and a negative technical situation.

Top importer Russia will not likely provide much help to the market either, the futures report of Salomon Smith Barney made available Monday said.

Walter Spilka said the larger-than-expected Russian sugar beet crop would mean increased sugar output and potentially lower import levels.

This meant that "if those imports decline, then prices could very well follow," he said.

Hefty Russian imports ranging from 5-6 million tonnes have been a vital ingredient in allowing sugar prices to recover after plunging last April to a 13-year nadir of 3.93 cents.

"Those purchases helped support world prices. The situation now is less positive in terms of Russian buying," said Spilka. "For now.there is a lot of sugar coming to the market and the world's largest buyer may very well buy substantially less."

Technically, the overhead gap in March sugar of 5.62-5.65 cents represents resistance for the market. Support should be found at 5.20 and all the way down to 5.00 cents.

Estimated volume traded reached 18,244 lots against the previous estimated total of 16,339 contracts.-Reuters