Reports of buying by end users as China reportedly added itself to the list of buyers lured out by lower prices, encouraging investors to close bets on the market extending its 30% slump.

White sugar jumped 4.0% in London in morning deals, with New York raw sugar adding 3% to come within an ace of retaking the market landmark of $0.20-a-pound.

The revivals followed reports that China had bought about 100,000 tonnes of sugar from Australia.

While China, the world's third-biggest sugar consumer, had been expected to rebuild state stocks, its return had not been forecast until at least next month.

"That was a bit left field for many people," Nick Hungate, executive director at Rabobank, told Agrimoney.com.

"We knew they have released some reserves, but to come to the market already was a bit of a surprise."

Buyers return 

China added to a list of sugar buyers this week which already included the likes of Pakistan and Tunisia, while Egypt confirmed plans to buy 1m tonnes of raw sugar this year.

Meanwhile, sugar mills in India on Friday urged the government to reverse steps taken to curb domestic sugar prices, which have fallen by below the cost of production, threatening delays in payments to cane farmers.

A perceived fall-off in buying by end users was cited as a main reason by traders for the slump in prices from multi-decade highs in January, with technical factors, such as moving average movements, accelerating the sell-off.

'Well into oversold territory'

However, David Sadler, at Sucden Financial, noted that many technical factors had now moved in favour of a market, with many fund managers already appearing to have taken short positions, limiting the scope of further selling.

Other technical indicators, such as the relative strength index (RSI), which compares averages of positive and negative closes, also indicated that the market was due for a bounce.

"RSIs are well into oversold territory," he said.

"We feel it is probably not a bad idea to lock in some profit… as it seems likely that at some point we will see a sizeable technical correction [upwards]."

'Knife edge'

As to whether prices were poised to return to their highs of earlier this year, Mr Hungate said it would "take a lot of encouragement" to regain the buyers who helped fuel the rally, but who may have been burnt by the last month's retreat.

"But the fundamentals are still on a knife edge," he added.

"The forecasts for Brazil look wet. There is a long, long way to go before the Indian [cane] harvest is in the bag. Everyone will be weather watching."