Mumbai, 18 Jun (Commoditiescontrol): Sugar prices fell on Monday as optimism grew around continued strong production in Brazil, the world's largest sugar producer. Unica reported that Brazil's sugar output for the 2024/25 crop year through May increased by 11.8% year-over-year, reaching 7.837 million metric tons (MMT). Additionally, the proportion of Brazil's sugar cane processed for sugar rose to 47.88% from 46.68% last year. This led the July raw sugar contract to drop by 0.45 cents, or 2.32%, closing at 18.98 cents per pound, despite gaining 2.26% the previous week. The August ICE white sugar contract in London also fell by $13.60, or 2.42%, settling at $548.50 per metric ton, after adding 1.6% the week before.
According to trader and supply chain services company Czarnikow (CZ), the global sugar market is expected to see a surplus of 5.5 million metric tons in the upcoming 2024/25 season (October-September) due to production increases in key regions. In India, a 29% rain shortfall in central regions has impacted soybean, cotton, and sugarcane crops, contributing to a 1.6% year-over-year decrease in sugar production as of April 30. The delayed monsoon rains could further affect planting schedules in crucial areas.
Last week, sugar prices hit a one-month high, driven by the International Sugar Organization’s (ISO) revised global sugar deficit forecast for 2023/24, now estimated at 2.95 million metric tons, up from the previous 689,000 metric tons. The ISO also raised its global sugar demand forecast to 182.2 MMT, fueled by increased consumption in India. Despite some underperformance by mills, Brazil's overall sugar production outlook remains stable, supported by dry weather accelerating the harvest.
In Australia, industrial actions at sugar mills were temporarily suspended as unions negotiated for better wages, affecting operations at the largest sugar producer in the country.
Globally, the sugar market continues to experience volatility influenced by weather conditions in key production areas such as Brazil and India. Analysts from BMI project a 1.5% increase in global sugar production to 185.7 million tons for the 2024/25 season, with consumption expected to rise by 0.5% to 179.7 million tons. The USDA forecasts record sugar production at 186 million metric tons for 2024/25, with demand projected at 178.8 million tons.
Speculative traders have reduced their net short positions, leading to a short-covering rally. Traders are closely monitoring technical support levels for the October sugar contract at 18.79 and 18.52 cents, with resistance expected at 19.35 and 19.64 cents. As global production dynamics shift and weather uncertainties persist, sugar prices are likely to remain volatile in the near term.
(By Commoditiescontrol Bureau: 09820130172)
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