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CSCE sugar settles down but above new lows

NEW YORK: CSCE sugar futures finished lower on Monday as speculative fund sales and origin pricing pounded raws anew, with analysts expecting the market to plunge further in the coming sessions.

"The funds are hammering the stuff," Marius Sonnen, president of Sonnen and Co. Inc., said. "It's a continuation of the doldrums in the market."

"I think longer term, there's an excellent chance of seeing 4.00 cents. I think 4.00 cents is not unrealistic," added Arthur Stevenson, softs analyst for Prudential Securities.

Key May settled down 0.11 cent at 4.88 cents a lb after trading between 4.99 and its new lifetime nadir of 4.88 cents.

Since starting the year at 6.10 cents, benchmark sugar has lost exactly 20 percent of its value. A fall to 4.00 cents, which some analyst now fear may happen, will bring the contract to within striking distance of the 13-year low of 3.93 cents reached during trading on April 28, 1999.

Spot on March dove 0.24 to end at 4.70 cents, just above its new lifetime low of 4.68, as the contract got hit by liquidation in front of its expiry on Feb 29.

Back months closed off 0.13-0.07 cent, except for on October 2001 which gained 0.10 to 6.50 cents.

Sugar held steady on some early trade buying, but pressure from speculative funds quickly dragged the market down, floor sources said.

Pressure in front on March was particularly severe as players liquidated their positions ahead of its going off the board on Tuesday.

Open interest in March as of Feb 25 fell 6,789 to 14,942 lots while May's open interest rose 3,141 to 105,536 lots.

"Those people who have been dreaming the market will rally a little bit should know the dream is over," a technician said. "I think we're going to take out 3.93 (cents)."

Traders said the market struggled in the face of gloomy fundamentals.

They pointed to plentiful supplies, the prospect of further pricing by origins like Thailand and Cuba along with the imposition of stiff import duties in countries like India and top importer Russia.

Chartists said support in May sugar should be at the contract low of 4.84 and in layers down to 4.50 cents. Below that, 4.35-4.40 cents lurks and then onto the psychologically important 4.00 cents mark. Resistance is now pegged at 5.00 cents.

Estimated volume reached 40,581 lots, against on Friday's estimated tally of 51,410 lots. Call volume touched an estimated 3,123 lots while put volume hit an estimated 4,291 lots.

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