Mumbai, 24 May (Commoditiescontrol): ICE sugar prices settled mixed on Thursday as the market stabilized above last week's significant lows. Over the past seven weeks, sugar prices have declined sharply due to increased production in Brazil, improving the global supply outlook.
The July raw sugar contract edged up by 0.03 cents, or 0.17%, to close at 18.26 cents per pound, recovering from last week's 18-month low of 17.95 cents despite a 6% weekly loss. In London, the August ICE white sugar contract dropped by $1.80, or 0.33%, to settle at $539.70 per metric ton.
Market stability was attributed to the robust pace of cane crushing in Centre-South Brazil. Dealers anticipate data from industry group UNICA next week covering the first half of May. Brazil's strong sugar harvest has fueled the bearish trend, with UNICA reporting that production in Centre-South Brazil hit 1.84 million tons in late April, an 84.25% increase from last year, thanks to drier weather conditions. However, there are concerns about prolonged dryness.
Germany's second-largest sugar refiner, Nordzucker, reported a 79% surge in annual profits on Thursday, as high sugar prices offset rising costs.
Projections from StoneX and S&P Global Commodity Insights estimate Brazil's 2024/25 sugar production at 42.3 million tons, indicating significant growth. Globally, shifts in production are also impacting the market. Datagro forecasts a modest global surplus of 1.62 million metric tons for the 2024/25 season, reversing the previous season's deficit due to recovering production in Thailand and increased output in China. Conversely, India's sugar production has decreased by 1.6% year-over-year as of April 30.
Speculators have increased their bearish bets on ICE U.S. raw sugar futures. The Commodity Futures Trading Commission (CFTC) reported that funds raised their net short position by 13,919 lots to 58,274 in the week ending May 14.
Traders are closely monitoring these developments, with technical support for the July sugar contract seen at 18.14 and 18.01 cents, and resistance at 18.48 and 18.69 cents. Given the rising production in Brazil and shifting global supply dynamics, sugar prices are expected to remain volatile.
(By Commoditiescontrol Bureau: 09820130172)
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