Asia Softs-Sugar awaits contract expiry; Tokyo rubber seen in wide range

* TOCOM rubber in 261-282 yen/kg range this week

* Physical sugar awaits NY October expiry

* Sellers may push up coffee premiums as London futures sink

By Lewa Pardomuan

SINGAPORE, Sept 30 (Reuters) - Thai raw sugar premiums will closely track movements in New York futures this week, while benchmark Tokyo rubber could trade in a wide range, buffeted by a U.S. funding impasse that will keep speculators on the sidelines, dealers said on Monday.

Rubber futures on the Tokyo Commodity Exchange set the tone for tyre grade prices in Southeast Asia, but the contracts are often dictated by currency and equity markets.

The most active March contract on TOCOM fell to its weakest since Aug. 22 at 265 yen a kg as the yen rose against the U.S. dollar as a shutdown of the U.S. government seemed increasingly likely. MKTS/GLOB]

"Considering this risk, I think funds can't take more new positions," said Gu Jiong, an analyst at Yutaka Shoji Co in Tokyo, adding that an earlier price target of 300 yen a kg would have to be adjusted. "The next support level will 261 yen, and resistance is at 281 or 282 yen."

The likelihood of a U.S. government shutdown increased after the Republican-controlled House of Representatives early on Sunday passed a measure that ties government funding to a one-year delay of President Barack Obama's landmark healthcare restructuring law.

In the sugar market, early indications showed Thai high polarisation raw sugar for next year's delivery was offered at a 70 to 80 point premium, down from 100 points last week.

Dealers are waiting for the expiry of the October contract for clues on demand after prices sank to a three-year low in July on rising output in main producer Brazil. Prices have rebounded by about six percent.

Some dealers expect a bigger-than-average delivery against the Monday expiry, which suggests the global market is digesting the huge crop. Mills in Brazil boosted ethanol output late last month due to strong demand.

"There are actually traders who are turning bullish on sugar," said Joyce Liu, an investment analyst at Phillip Futures in Singapore, referring to Friday's a report by the U.S. Commodity Futures Trading Commission (CFTC).

"Although we have a record crop in sugar cane in Brazil, there's an increase in crushing for ethanol as well. That takes some sugar supply off the market. Maybe some people start to realise that we are not having as much sugar as we had expected."

Since premiums and futures usually move in opposite directions, a possible rally in the New York market after the contract expiry will weigh on the value of Thai sugar.


Robusta sellers in Vietnam and Indonesia may push up premiums this week after prices plunged to three-year lows in London on the prospect of a global surplus.

The next crop in top robusta producer Vietnam is forecast to hit a record 25 million 60-kg bags in the season to September 2014, a Reuters poll shows.

In the cocoa market, butter ratios may stay at their 5-year peak this week, while demand from Asia and the Middle East may prevent powder prices from falling below the current level of $1,600 a tonne. (Editing by Richard Pullin)