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

Reuters

* 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 willclosely track movements in New York futures this week, whilebenchmark Tokyo rubber could trade in a wide range, buffeted bya U.S. funding impasse that will keep speculators on thesidelines, dealers said on Monday.

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

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

"Considering this risk, I think funds can't take more newpositions," said Gu Jiong, an analyst at Yutaka Shoji Co inTokyo, adding that an earlier price target of 300 yen a kg wouldhave to be adjusted. "The next support level will 261 yen, andresistance is at 281 or 282 yen."

The likelihood of a U.S. government shutdown increased afterthe Republican-controlled House of Representatives early onSunday passed a measure that ties government funding to aone-year delay of President Barack Obama's landmark healthcarerestructuring law.

In the sugar market, early indications showed Thai highpolarisation raw sugar for next year's delivery was offered at a70 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 lowin July on rising output in main producer Brazil. Prices haverebounded by about six percent.

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

"There are actually traders who are turning bullish onsugar," said Joyce Liu, an investment analyst at Phillip Futuresin 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 takessome sugar supply off the market. Maybe some people start torealise that we are not having as much sugar as we hadexpected."

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

COFFEE, COCOA

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

The next crop in top robusta producer Vietnam is forecast tohit a record 25 million 60-kg bags in the season to September2014, a Reuters poll shows.

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

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