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CSCE sugar ends up, Russian buying sparks rally

NEW YORK: CSCE sugar futures rallied to finish at a one-month high Monday on the back of all-around buying into stops, fuelled apparently by market talk of hefty purchases by top importer Russia.

"There were rumours that there was a spate of buying by the Russians," Marius Sonnen, President of Sonnen and Co. Inc. here said in explaining what triggered the surge in sugar futures.

May sugar shot up 0.20 to end at 5.42 cents a lb, just a hair beneath the intra-day peak of 5.43 cents. The session low stood at 5.26 cents.

It was the highest close for benchmark sugar since February 11, 2000 when it settled at 5.49 cents.

July went out 0.11 stronger to 5.42 cents as well and October added 0.13 to 5.83 cents.

Back months were 0.08 cent firmer each, except for October 2001 which climbed 0.09 to 6.47 cents.

Brokers said sugar got a strong boost when talk that Russian importers were picking up several cargoes ahead of the imposition of additional duties on sugar imports from April 1.

"One broker on the exchange was said to be buying a lot of sugar for the Russians. I think CIS (Cargill) was involved in it," a floor broker said.

"There has been a bit of business done by the Russians," another broker added.

The talk of strong Russian physical offtake in turn inspired robust speculative fund shortcovering and commission house buying which hit stops in the May sugar contract at 5.35-5.39 cents, dealers said.

May penetrated the 40-day moving average at around 5.40 cents, but any further advance was aborted when heavy scale-up origin pricing came in.

"The origins were really selling into this thing," a trader said. "That kept the rally from going too far."

The long-term outlook for sugar though remains cloudy, especially when higher sugar duties come into effect in Russia next month while excess supplies remain uncomfortably high.

"We maintain our long-term negative price view. Any near-term rally is likely to be a prelude for another move southward," said Prudential Securities analyst Arthur Stevenson, adding near-term resistance in May would be at 5.50 cents.

In other news, the bi-monthly CFTC commitment of traders report showed that as of March 7, 1999, non-commercials, corresponding to the funds, were net short by 24,392 lots. Non-reportables, which normally mean smaller speculators, were net long by 886 lots.

On a technical basis, dealers said they feel short-term resistance in May sugar would be at 5.50 cents and the 50-day moving average at 5.51 cents. The next level would be around the 5.70 cents area.

They said support should be at 5.00 cents, 4.90, the contract low of 4.84 cents and then 4.50 cents.

Estimated volume reached 31,013 lots, against the previous estimated volume of 13,794 lots.

Call volume touched an estimated 2,763 lots while put volume hit an estimated 1,969 lots.

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