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CSCE sugar closes off as upside probe sputters

NEW YORK: CSCE sugar futures reversed course to match its lowest close for the week on Friday after a trade-inspired probe of the upside ran out of gas and raws came off due to speculative and local pressure.

The combination of plentiful supplies and difficulties encountered by excess sugar in finding homes makes it likely that sugar will trend lower over the next few sessions, brokers and analysts said.

"All of this is putting continued pressure on the market," said Salomon Smith Barney analyst Walter Spilka. "There's more sugar out there than can be eaten."

Salomon is a unit of financial services giant Citigroup C.N.

Key March sugar lost 0.04 to settle at 5.45 cents a lb, ranging from 5.60-5.43cents, as the contract matched Wednesday's close.

On the week, benchmark sugar has declined 6.67 percent after finishing on January 7 at 5.84 cents. The contract has plunged 10.65 percent since ending on January 3, the first trading day of the year, at 6.10 cents.

May fell 0.08 to end at 5.69 cents. Back months lost 0.06 or 0.05 cent.

Early trade buying allowed sugar futures to extend its corrective bounce after its recent steep falls, with key March touching a session peak of 5.60 cents, floor sources said.

"It didn't go too far as the trade buying got stretched and some fund selling came in," one physical broker for a New York-based trading house said.

A touch of Thai pricing was also said to have helped cap the market, a floor dealer said.

Small speculators piled in and sold sugar before light local buying near the close pared losses in futures, the dealers said.

Analysts said they feel sugar will remain under pressure over the short-term. They said upcoming harvest pressure from origins like Cuba and Thailand will make it tough for sugar to sustain any kind of a rally.

Technicians said the next level of resistance for March sugar would be at 5.62 cents, the low last December and a mark which represented previous support.

Support should emerge at 5.40 cents and in layers down to the psychologically vital 5.00 cents level.

Estimated volume reached 19,218 lots against the previous estimated total of 20,708 contracts.

Call option turnover was estimated at 7,589 lots against the previous estimated total of 3,764 and puts were calculated at 3,565 from an estimated at 2,703 lots. -Reuters