"Our clients are not rushing to make any decisions. They are closely watching fluctuations of the March contract in New York, which is seen softening in the longer term," said a trader at a major Japanese trading house. Coffee, Sugar and Cocoa (CSCE) world sugar futures ended near the day's low on Thursday with key March sugar shedding 0.21 cent at 7.27 cents a lb, despite a reversal the previous day when they finished near their highs after rebounding from contract lows. The US currency, meanwhile, made a sharp retreat against the yen this week, weighed down by sales by hedge funds and mounting concern over the US economy.

Japan, which has almost finished purchasing Thai raw sugar for October shipment, is expected to buy about 500,000 tonnes of raws from the southern hemisphere betweenNovember and March while crushing of the new Thai crop gets underway, traders said. Japan tends to buy mainly from Australia and South Africa during this period. In the first eight months of 1998, Japan imported 305,339 tonnes of raw sugar from Australia and 42,954 tonnes from South Africa, according to figures released by the Finance Ministry. The amount compares with a total of 655,000 tonnes of Australian sugar and 140,000 tonnes of South African sugar imported in 1997.

On Monday, Thai raw sugar premiums for January-March shipment were quoted at 50 points above CSCE prices, unchanged from Wednesday, traders said.

March-May premiums were quoted at around 37-45 points, down slightly from 40 points bid only on Wednesday. Traders said market sentiment was bearish in general, partly because of rumours that Indonesia was having trouble importing sugar and opening letters of credit.

Forecasts that world sugar output was expected to hit a record high in 1998-99 were also weighing on sentiment, as thatwould add to the current oversupply of sugar, they said.

Earlier this week, German sugar analyst F.O. Licht said raw sugar world output would rise to 129.9 million tonnes in 1998-99 compared to 126.2 million the previous year.