CSCE raw sugar finished lower on Thursday with some fund players taking profits, some light trade selling, and others playing the spread on the March and May contracts, traders said.
They said rollover business out of nearly expired March sugar positions into may contract was a big feature on Thursday.
The March/May spread range was 21 to 27 points. "We had more action on the March/May spread today. That's where most of the activity was. We also saw some locals short the market. And some funds who bought the other day and were selling today," said one sugar broker.
CSCE March sugar closed 0.08 cent lower at 5.52 cents a lb after trading from 5.50 to 5.61 cents. Newly most-active May sugar finished with a 0.06-cent loss at 5.78 cents, within a 5.71 to 5.85 cents range.
The rest closed off 0.01 to up 0.09 cent. Though sugar prices were weaker, one trader said the price dip closed the chart gap that formed when the market was closed in observance of the Presidents Day holiday on Monday.
They said the gap closing might mean a base was being established from which prices could rise. Some dealers said they felt confident that the March low of 5.27 cents hit a week ago marks a medium-term bottom.
But with the March contract nearing expiration, others said sellers may pressure prices in the near term. "There is selling above the market.
But underneath there is good support. So I think whoever wants to buy this market might step back for the moment and see if they can get it for 5 points less," said one sugar dealer.
He sees technical support at 5.40 cents where there is congestion on the March chart. Producers have until first notice day next on Friday to decide to sell March sugar or not at current low prices. Dealers said some producers might have to sell by then, which could drag on prices.
Once March sugar comes off the board, they said, Might sugar may have room to move higher. But the lower prices have also stimulated physical buying.
On Thursday, Indonesian state trading firm PT Rajawali Nusantara Indonesia said it plans to hold a tender on February 20 to buy 50,000 tonnes of white sugar for end-March delivery.
The European Union sold 69,500 tonnes of white sugar at a maximum rebate of 52.427 euros per 100 kg at Thursday's tender, which brings the 2003/04 cumulative to 1,210,650 tonnes.
Analysts said sugar should stay under pressure from prospects for a supply glut, high freight rates that have squeezed cash demand and forecasts for top grower Brazil to harvest another record crop in 2004/05.
On Thursday's final estimated CSCE sugar volume was 50,716 lots, compared with Wednesday's official volume at 61,263 lots. Sugar 14 volume was 660 versus on Wednesday's 280 lots.
Sugar call option volume came in at 5,734 and puts at 2,646 on Thursday. Open interest for sugar 11 rose by 1,119 lots to 282,066 on Wednesday.
Losses in London white sugar led New York prices down.
Liffe May sugar closed $1.70 lower at $197.30 a tonne, after trading from $197 to $199 a tonne.