20000114

CSCE sugar slides to 8-month low after chart break

NEW YORK: Fund selling and bearish fundamentals combined to shove CSCE sugar futures to eight-month lows on Wednesday, with 1999's 13-year lows in sight now that key chart support has given way, dealers said.

"The funds and the trade are predominantly short and from a technical point of view and a fundamental point of view the market seems to be going lower and lower and lower," said Marius Sonnen, of Sonnen and Co.

Benchmark March fell 0.22 cent to 5.45 cents a lb, falling four percent to the bottom of its 5.62-5.42 range. It hit the lowest intraday price since 5.40 cents on May 4, just after the April 28 contract low of 5.06 and a 13-year spot low was set.

May raw sugar fell 0.18 cent to 5.69 cents and the rest shed between 0.02 and 0.18 cent.

Fund selling started the skid, taking out the 4-1/2-month low of 5.62 from Dec 1. But analysts said falling world consumption meant that a ballooning glut could no longer be abided at current prices.

On the LIFFE, refined sugar futures followed New York's lead, front March ended down $1.90 a tonne at $168.40, after earlier touching the lowest for the contract since Dec 1.

"The bearish fundamentals that have been overhanging this market are finally catching up with it, in the light of pretty poor physical offtake," said Ann Prendergast, commodity analyst at Refco Inc.

Behind the buildup in stocks, which Prendergast estimated currently equalled about 50 percent of world consumption, was a big increase in production by lead-grower Brazil in recent years.

At the same time, the Asia financial crisis hit consumption hard, while traditional top-buyer Russia was accumulating stocks that now exceed its domestic sugar production by upwards of 1.5 tonnes, according to Prendergast.

Meanwhile, the European Union granted export licences for 61,750 tonnes of white sugar at a maximum rebate of 52.940 euros per 100 kilos at a weekly tender on Wednesday, traders said.

Estimated final volume for sugar 11 was 39,633 contracts, compared to an official 22,466 on Tuesday. Sugar call option turnover was estimated at 7,303 lots and puts were 3,696.

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