20000219CSCE sugar closes up, but may probe fresh lows

NEW YORKL: CSCE sugar futures settled with modest gains Thursday on trade-related spread dealings as raws rebounded after plunging previously to a fresh 8-1/2 month low.

"Everybody was waiting for a bounce," said Patrick Funaro of the Brazil desk of FIMAT Futures here. "Basically, it's a consolidating market."

Key May climbed 0.11 to finish at 5.22 cents a lb, trading 5.29-5.14 cents.

Wednesday, it had stumbled to a new lifetime nadir of 5.10 cents before closing at 5.11 cents, the lowest mark for benchmark sugar futures since June 1, 1999 when it ended at 5.00 cents.

Spot March sugar went out 0.12 firmer to 5.07 cents, moving between 5.13-4.97 cents.

The rest were 0.06 cent higher each.

Sugar headed north at the onset of business when trade buying of the spreads, option-related purchases and light speculative covering drove it to the highs, brokers said.

"You got a nice pop in here because it's really been oversold," a floor dealer said.

But trade and producer sales swiftly capped sugar and the market just could not generate any further upside momentum.

"We just failed miserably" at the top, said Funaro.

Brokers said they feel May sugar needs to fill an overhead gap representing resistance of 5.62-5.65 cents to spark a further move north. For March, the upside gap sits between 5.43-5.47 cents.

Most market participants are apprehensive that if sugar cannot make much headway to higher ground over the next few sessions, the likely near-term direction for futures would be south.

"I think we have some more room on the downside," Funaro said, adding the key support level for the May contract would be around 4.90 cents while it would be 4.65 cents for March.

In industry news, broker Czarnikow Sugar reiterated the bearish tint of the market by forecasting world sugar stocks at a record 7.22 million tonnes, raw value, in the 1999/000 crop cycle.

On the physical side, the Philippines rejected offers for the import of 30,000 tonnes of refined sugar and the export of the same volume of raws.

India said that imported sugar will be subjected to a monthly levy to place it on equal footing as locally produced sugar. It means 30 percent of sugar imports will be sold at a level fixed by the government at a lower than market rate.

Estimated volume traded in the CSCE sugar market reached 24,361 lots. Call volume touched an estimated 6,174 lots while put volume reached around 1,722 lots.

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