Sugar market analysis ended 19.10.2004

NEW YORK (Dow Jones)--World raw sugar futures ended mixed on the New York Board of Trade Tuesday after an early advance failed, but a subsequent drop to 2/1 – 2 week lows was curbed. Scale-down buying by trade houses lent support.

Front months closed a bit lower while later months ended firmer. March settled down 2 points at 8.93 cents a pound and May lost 3 points to 9.06c. "Funds and speculators continued to buy this morning, but producers sold into it," a floor broker said. Locals sold and March retreated, "but held an area of support at 8.85c - just above an old contract high at 8.84c."

March tumbled at mid session, but pared losses in late action. The market traversed a wide 20-point range, but was fairly quiet, the floor broker said.

Funds and small speculators were net long about 97,000 lots on Tuesday's close, a desk trader calculated.

The March/May spread worked at 11 to 14 points May over and settled at 13 points, against 14 points on Monday. Some 39 against actuals were posted in March. Futures volume was estimated at 34,354 lots. In the options ring, 7,272 calls and 6,445 puts traded.

November world ethanol settled 5 cents higher at $1.09 a gallon Tuesday.

Ethanol futures volume was zero, and no calls or puts traded, the exchange said. "The trade did some buying in March and May on the reopen," a desk manager said. "The trade and producers were selling however, and we caught sell stops on the way down. Trade buying lent support."

"From the size of the trade buying, I believe there may have been some physical activity."

On Wednesday, Thailand's Cane and Sugar Corp. holds a selling tender for 208000 tons of Quota B raws for March-September 2005 shipment.

Trade house ED&F Man in its latest sugar situation report said a smaller Thai crop in 2005 and increased Indian and Chinese demand should lift Thai raw prices. Global raw supplies are expected to tighten in first-half 2005 as availability from origins slows and import demand from Russia, China and India picks up. High freight rates could cause Western Hemisphere raws to trade at sizable discount to Far Eastern values to stay competitive. Speculative interest in futures is expected to remain high.

The U.S. Department of Agriculture's attaché revised Brazil's 2004-05 cane production upward to a record 385 million tons, a 3% increase from the previous estimate. The center-south is forecast to produce 325 million tons of cane, up 9% from last year, thanks to larger plantings and favorable weather from May to June. The center-south harvest should be finished in mid-December. In Parana, some areas may remain uncut.

The Commodity Credit Corporation of the U.S. Department of Agriculture sold 7.5 million pounds of refined beet sugar held in Michigan in a tender that closed last Thursday, the agency said late Monday. The CCC offers another 52.5 million pounds of refined beet sugar in a tender this Thursday.

U.S. sugar beets were 67% harvested on Sunday, behind the 5-year average of 73%, the USDA said Monday in its weekly crop progress report.

Open interest in world sugar futures set a third straight open interest record of 338,615 lots on Monday as May, July and October interest grew.

Chart support for Nybot March lies at 8.85c, 8.83c, 8.80c, 8.75c and 8.70c. March faces resistance at 9.05c, a gap at 9.09c to 9.14c, 9.20c, 9.26c and 9.30c.

December world options expire Nov. 12.

Nybot Change Range Liffe Change

Mar 8.93 dn 0.02 8.85-9.05 Dec 240.00 up 1.20

May 9.06 dn 0.03 8.98-9.18 Mar 250.60 dn 0.20

Source: Dow jones