Mumbai, 26 Jun (Commoditiescontrol): ICE sugar futures gave up most of their gains from the previous session on Tuesday, as a stronger dollar made the natural sweetener more expensive for holders of other currencies.
The July raw sugar contract dropped 0.31 cents, or 1.60%, to close at 19.10 cents per pound, reversing last week's 2.4% decline. Similarly, the August ICE white sugar contract in London fell by $5.50, or 1.5%, settling at $561.70 per metric ton. Despite the recent fluctuations, the market has remained within its range of 18 to 20 cents per pound.
Operations resumed at the Tiplam terminal in the Santos port after a fire last Thursday temporarily halted sugar loading. Dealers noted that the market's response was within expected ranges.
On Monday, New York sugar futures rose to a one-week high, and London sugar climbed to a six-week high on news that India would maintain its sugar export restrictions. This move followed the Indian government's statement that there were no plans to review these restrictions.
Concerns about dry weather in Brazil continue to pose a threat to cane crops, while India's monsoon rains, essential for sugarcane development, remain a critical focus. A 29% rainfall deficit in India's central regions has impacted soybean, cotton, and sugarcane crops, resulting in a 1.6% year-over-year decrease in sugar production as of April 30. Delayed monsoon rains could further disrupt planting schedules, adding to market uncertainty.
This past week, news of increased sugar output in Brazil has exerted downward pressure on prices. Unica reported that Brazil's sugar production for the 2024/25 crop year through May was up 11.8% year-over-year at 7.837 million metric tons. Additionally, the percentage of Brazil's 2024/25 sugar cane crop crushed for sugar rose to 47.88% from 46.68% last year.
Looking ahead, trader and supply chain services company Czarnikow (CZ) forecasts a global sugar surplus of 5.5 million metric tons for the 2024/25 season (October-September), driven by increased production in key regions. In contrast, Copersucar, the world's largest sugar merchant, remains optimistic about mid-term sugar prices, suggesting that dry weather in Brazil could reduce production for the 2024/25 season.
In a notable industry development, BP has agreed to buy Bunge's 50% stake in the Brazilian sugar and ethanol joint venture BP Bunge Bioenergia for $1.4 billion, indicating significant investment interest in the sector.
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 19.22 and 18.96 cents, with resistance expected at 19.75 and 20.02 cents.
(By Commoditiescontrol Bureau: 09820130172)
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