ICE Sugar Futures Dip as Brazilian Production Surges

Mumbai, 15 Jun (Commoditiescontrol): ICE sugar futures declined on Friday, reversing from one-month highs, driven by increased sugar production in Brazil. According to Unica, Brazil's sugar production for the 2024/25 crop year through May rose by 11.8% year-over-year to 7.837 million metric tons (MMT). Additionally, the percentage of Brazil's sugar cane crop processed for sugar increased to 47.88% from 46.68% last year. The July raw sugar contract dropped by 0.16 cents, or 0.82%, to close at 19.43 cents per pound. Similarly, the August ICE white sugar contract in London fell by $5.30, or 0.93%, settling at $562.10 per metric ton.

Thursday's rally to a one-month high was supported by the International Sugar Organization's (ISO) recent revision of the global sugar deficit for 2023/24 to 2.95 million metric tons, up from a February estimate of 689,000 metric tons. The ISO also raised its global sugar demand forecast to 182.2 MMT, reflecting increased consumption in India.

Brazil's dry weather has expedited harvesting, although some mills underperformed. Despite this, Brazil’s overall sugar production outlook remains stable. In contrast, India's sugar production decreased by 1.6% year-over-year as of April 30, with a delayed monsoon potentially postponing planting in key regions.

In Australia, industrial actions at sugar mills were temporarily suspended as unions sought better wages, affecting operations at the country's largest sugar producer.

Globally, sugar markets remain volatile, influenced by weather conditions in key producing regions like Brazil and India. BMI analysts project a 1.5% increase in global sugar production to 185.7 million tons for the 2024/25 season and a 0.5% rise in consumption to 179.7 million tons. The USDA forecasts record sugar production at 186 million metric tons for 2024/25, with demand reaching 178.8 million tons.

Speculative traders have reduced their net short positions, triggering a short-covering rally. Traders are closely monitoring technical support levels for the October sugar contract at 19.33 and 19.18 cents, with resistance anticipated at 19.64 and 19.80 cents.

As global production dynamics shift and weather uncertainties persist, sugar prices are expected to remain volatile in the near term.

(By Commoditiescontrol Bureau: 09820130172)