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CSCE sugar closes softly, seen stuck in range

NEW YORK: CSCE sugar futures drifted to a marginally lower finish on Tuesday as futures continued to wallow in range-bound dealings with little in the way of news to allow it to break out of its current trading range.

"What can you say? It's the same trading pattern. Something will spark it eventually, but we don't know when," a broker for a New York-based investment house said.

March sugar came off 0.03 to end at 5.39 cents a lb, trading 5.42-5.30 cents. May eased 0.01 to 5.51, July retreated 0.04 to 5.81 cents and back months, as they did on Monday, fell 0.02 cent each.

Speculative fund sales at the start forced sugar down to its lows before trade buying brought it back to near unchanged levels, floor sources said.

"It slowly worked its way back, but basically we're just twiddling our thumbs in here. It's been a real slow day," a floor dealer said.

Light origin pricing was seen in the market at the top of the range.

"The selling has been in trickles," a broker said. "The Thais are forced to price every time someone declares a vessel."

For now, key March sugar is pinned between a small downside gap from 5.19-5.20 cents and an overhead chart gap at 5.62-5.65 cents.

The only hope for sugar is that the fund selling pressuring futures may abate ahead of March's expiry on February 28, said a report by Prudential Securities made available Tuesday.

"The likely reluctance of funds to increase their net short exposure, given the approach of the March expiration, and the unwillingness of some origins to sell at prevailing low prices point to a possible near-term rally," said analyst Arthur Stevenson.

The latest CFTC commitment of traders report released on Friday showed speculative funds with a net short position of 24,080 lots as of January 25.

Stevenson said March should trade "through the 5.60 to 5.70 cent(s) level" before one could be encouraged by sugar's upside potential.

In other news, German analyst F.O. Licht trimmed its forecast for world sugar output in 1999/2000 to 135.3 million tonnes against 133 million in 1998/99.

"This shows that production growth has not yet come to a halt despite disastrously low global prices. Thus, another addition to surplus stocks in 1999/2000 seems inevitable," Licht said.

Swiss family-owned commodities trader Andre & Cie announced on Tuesday nearly 20 percent in job cuts in a restructuring to focus on its core grain businesses and effectively dump loss-making commodities like sugar.

Its decision follows hard on the heels of news that brokerage house Merrill Lynch and Co. said it would quit the agricultural and metals futures markets.

In another development, the Sao Paulo Cane Agroindustry Union (Unica) said Tuesday Brazil's centre-south produced 16.89 million tonnes of sugar in 1999/2000 against 15.16 million the previous season.

Estimated volume traded in the CSCE sugar market reached 14,590 lots against the previous estimated total of 28,351 lots. Call volume touched an estimated 3,187 lots while put volume reached around 1,399 lots.-Reuters