Mumbai, 19 Jun (Commoditiescontrol): Sugar prices faced moderate losses on Tuesday, driven by increased production in Brazil, the world's largest sugar producer, and a weakening Brazilian real. According to Unica, Brazil's sugar output for the 2024/25 crop year through May rose by 11.8% year-over-year, reaching 7.837 million metric tons (MMT). Additionally, the proportion of Brazil's sugar cane processed for sugar increased to 47.88% from 46.68% last year.
The July raw sugar contract dropped by 0.06 cents, or 0.32%, closing at 18.92 cents per pound, despite gaining 2.26% the previous week. Similarly, the August ICE white sugar contract in London fell by $1.90, or 0.35%, settling at $546.60 per metric ton, after a 1.6% increase the week before. Dealers noted that the market appears stuck in its recent range of 18 to 20 cents per pound.
Concerns about dry weather in Brazil continue to threaten the condition of cane crops. Attention is also focused on India, where good monsoon rains are crucial for adequate sugarcane development. Weather remains a significant driver of market sentiment, carrying substantial uncertainty, according to analysts.
Czarnikow (CZ), a trader and supply chain services company, forecasts a global sugar surplus of 5.5 million metric tons for the 2024/25 season (October-September) due to increased production in key regions. In India, a 29% rain shortfall in central regions has impacted soybean, cotton, and sugarcane crops, leading to a 1.6% year-over-year decrease in sugar production as of April 30. 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 country's largest sugar producer.
Globally, the sugar market continues to experience volatility influenced by weather conditions in key production areas such as Brazil and India. 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 18.84 and 18.68 cents, with resistance expected at 19.19 and 19.38 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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