February 2, 2003	Sunday	Ziqa’ad 29, 1423

NEW YORK, Feb 1: Raw sugar futures finished firmer on Friday amid late short-covering by small speculators, with most operators saying the market may reignite a rally which hoisted the sweetener to an 18-month peak this week.

CSCE March sugar climbed 0.06 cent to settle at 8.64 cents a lb, near the top of its 8.42-8.66 cents trading band.

On Wednesday, the contract finished at 8.70 cents in the highest close for sugar on a spot basis since ending at 8.83 cents on July 19, 2001.

It was the local buying which popped it up right on the close, a senior brokerage house dealer said.

May rose 0.03 cent to finish at 8.12 cents. Except for two contracts, the rest of the complex added 0.05 cent.

Sugar lost ground at the onset of trading as aggressive bouts of sales from speculative funds extended the correction the market had been experiencing since touching that 1-1/2-year high on Wednesday, floor sources said.

But trade buying of the spreads stabilized sugar and overly short small speculators were forced to cover going into the conclusion of the week’s business, they said.

I think the locals were anticipating some more selling depressing the market and when that did not materialize, they were forced to cover, one dealer said.

Analysts said sugar continued to show strength and the correction seen the past two sessions may just be a brief consolidation before another rally possibly gets going in the market.

I think it may still work its way higher although it looks a bit top heavy and overbought, one broker noted.

Technicians said the next level of resistance for the March raw sugar contract is the contract high of 8.85 cents and then 8.94 cents. Further on, the 67 per cent retracement of the decline from 11.40 cents in October 2000 would be 9.30 cents.

Initial support is seen at 8.50 and 8.42 followed by layers down to 8.00 cents, they said.

Estimated final volume touched around 42,383 contracts, compared with the previous tally of 31,465 lots. Call volume reached 4,612 lots and puts stood at 2,636 lots.

Open interest rose 800 to 266,752 lots as of Jan. 30.

The weekly CFTC commitment of traders report showed the funds and small speculators with a net long futures position of 106,413 lots, much larger than trade forecasts of net long 85,000-90,000 lots. Last week, they were net long 80,588 lots.

It’s much larger than anybody anticipated and does not even include all the buying done last Wednesday, an investment house broker said. Will anybody sell it even though they are so long in sugar? I’m not immediately certain if the impact of this number is to sell it.

Meanwhile, US domestic sugar futures closed mixed Friday.

March rose 0.25 cent to end at 21.50 cents a lb while May dipped 0.02 to 21.88 cents. The rest ranged from 0.04 cent easier to 0.07 cent higher.—Reuters