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CSCE sugar surges to strong finish on specs, trade

NEW YORK: CSCE raw sugar futures settled higher Thursday, with speculative buying into stops and robust trade buying of the spreads enabling raws to breach nearby chart points.

"The market exploded on the way up," Patrick Funaro, vice-president of the Latin American desk at FIMAT Futures, said. "We closed very well."

May sugar SBKO jumped 0.20 cent to finish at 5.45 cents a lb, near the top of its 5.49-5.26 range. After touching a recent high of 5.42 cents, it would be the highest close for benchmark sugar since February 9, 2000 when it closed at 5.49 cents.

July went out 0.15 up to 5.46 cents and October SBV0 gained 0.11 to 5.82 cents. Back months ended 0.09 cent higher.

Sugar popped higher at the start, buoyed by trade buying of the spreads and commission-house purchases as it slowly ate away at robust scale-up producer selling, floor sources said.

Cargill was a noted buyer of the July/October spread, something it has done over the past few sessions, they said.

"They slowly took the selling out," Funaro said, adding the market hit stops when in May sugar once it hit 5.43-5.44 cents, causing it to power within a hair of the key resistance point at 5.50 cents.

Local and speculative profit-taking pared the market's advance although sugar seems poised to crack 5.50 cents, basis May, and launch a probe toward the overhead gap between 5.62-5.65 cents.

Funaro said sugar may "give it another shot to the upside," but a failure to do so may send it back down to the 5.30 cents area.

A technician for an investment house in New York said: "The technical systems are positive (although) there is still a bit of overhead (producer) resistance in the market."

Technically, dealers put resistance in May at 5.50 cents, the gap from 5.62-5.65, and then the 5.70 area. Support would be at 5.25-5.35 cents, a place which used to represent resistance for the market.

Estimated final volume reached 34,216 lots, against the previous estimated volume of 15,218 lots. Call volume stood at an estimated 6,664 lots while puts reached around 2,794 lots.

In industry news, the International Sugar Organisation (ISO) said Thursday the world sugar surplus is expected to fall to 3.59 million tonnes, raw value, in 1999/2000, from a previous estimate of 4.76 million tonnes.

"Although...world production is lower, it does not in any way change the fundamental picture, which remains seriously over-supplied," the ISO said in a quarterly report.

It noted that 1999/2000 would be the fifth successive season of surplus, with a combined total of nearly 20 million tonnes of excess sugar on the books.

Funaro said the performance of the raw sugar market "doesn't change the overall bearish situation" in sugar.

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