London sugar futures ended weaker on Wednesday in spread-based trade and dealers said activity remained focused on the coming expiry of the March contract.
Front-month March closed $4.00 down at $187.00 a tonne, having moved between $191.50 and $187.00 on 2,685 lots from total turnover of 6,352 lots. May slipped $2.80 to $192.00 on 2,191 lots.
The March-May spread was quoted around a $4.00 to $5.00 discount, from a $3.00 to $3.50 discount on Tuesday.
Dealers said the front spread in London would continue to remain choppy in the run-up to the March expiry on February 13.
"Some funds have been selling the March-May spread and it has seen pressure on the downside but when the selling spree ends the market should start to be fundamentally driven again," one dealer said.
"There has also been a little bit of trade selling and there is also some trade buying. The spread may have reached a bottom now."
Traders and analysts said high freight rates had tightened supplies of high-grade refined sugar, making it expensive for refineries to import raw sugar.
"It looks like there will be limited supplies of deliverable refined sugar as far ahead as for the May contract. Of course this could change, but freight is a strong factor," another said.
Traders said the funds would be a key driver on the London and New York markets.
Technical analysts said the market was trapped in a $177.10 to $200.20 range, basis March.
Initial support was seen at $183.00, with resistance pegged at $194.60 and $197.00.
Analysts saw pressure in the coming months due to surplus global stocks and a lack of strong demand.
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