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CSCE sugar closes off but key support untested

NEW YORK: CSCE sugar futures sagged on fund and origin selling on Tuesday, but active March held above key support at 5.62 cents a lb despite efforts by locals to run stops below that December bottom, dealers said.

"The funds have been fairly sidelined recently, they seem to have picked up a little life today," said Arthur Stevenson, softs analyst at Prudential Securities. "The market really is not seeing any bounce or pick up in terms of physical offtake and I think that is a little discouraging."

March sugar slipped 0.16 cent to 5.67 cents a lb, moving between 5.80 and 5.65 cents. May settled at 5.87 cents, off 0.18 cent, and the rest of the board eased 0.10 to 0.23 cent.

Dealers said it was likely some seasonal selling originated out of Thailand and Brazil.

"There were rumours that some Thai sugar was sold to Russia but apparently it's just rumours," said one floor broker. "Other than that, demand is fairly slack."

Dealers said the 5.62 cent level, a 4-1/2 month low from December 1, was probably protecting stop-loss sell orders. That chart point has to give way before the month-old 5.65-6.18 range is broken.

"It looks like small specs want to test that number to see what lies underneath," the broker said.

Chartists peg resistance at 5.98 cents and then the psychologically-important barrier of 6.00 cents.

In industry news, the International Sugar Organisation (ISO) said Tuesday that world sugar prices are unlikely to improve in the first half of 2000.

"December developments both in demand and supply keep the global fundamental picture rather bleak with little hopes for better sugar prices in the coming six months," the ISO said in a monthly report.

Meanwhile, Thailand's sugar cane output in the 2000/01 (November-October) season is expected to drop to 30-40 million tonnes from a projected 55 million tonnes in the 1999/00 season, vice-president of the Thai Northeastern Cane Planters Association, Pairoj Vechpanich, said on Tuesday.

The Indian Sugar Mills Association (ISMA) said on Tuesday that India's recent hike in import duties on sugar could cut imports of the commodity to 30,000 to 40,000 tonnes per month from about 70,000 to 80,000 tonnes.

India's government last month raised the import duty on sugar to 40 percent from 27.5 percent after repeated demands from the sugar industry that the inflow of cheap foreign sugar was hurting local sugar millers and farmers.

Estimated final volume for sugar 11 was 21,692 contracts, compared to an official 11,485 on Monday. Sugar call option turnover was estimated at 4,763 lots and puts were 3,877.

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