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ICE Raw Sugar Rises On Stockpiling; India Faces Supply Concerns Amid Lockdown

26 Mar 2020 8:12 am
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Mumbai (Commodities Control) – Raw sugar futures on ICE rose for a third consecutive day on Wednesday, buoyed by a rebound in global equities and as traders started to price in stockpiling linked to the coronavirus pandemic.

NY sugar on Wednesday rallied to a 1-1/2 week high on concern about supply disruptions. In India, several ports and terminals have declared force majeure due to shutdowns from the coronavirus pandemic. The Indian Sugar Mills Association (ISMA) on Wednesday said that India's cane crushing may be affected during the 3-week long lockdown imposed by the Indian government to slow the spread of the coronavirus.

May raw sugar ​​settled up 14 cents, or 1.2%, at 11.41 cents per lb, in another positive session as it continues to climb from one and half year low of 10.59 cents per lb. May white sugar ​​was little changed at $338.90 per tonne.

Equities rebounded across the globe, leaping on news of a $2 trillion U.S. fiscal stimulus package to deal with economic impacts of the coronavirus, and most commodities markets were up as well.

Strength in the Brazilian real Wednesday was also positive for sugar as the real rallied 1.97% to a 1-week high against the dollar as it recovers from last Wednesday's record low of 5.2523 reals/USD.

Weaker energy prices tend to prompt cane mills in top producer Brazil to produce more sugar at the expense of biofuel ethanol, though analysts say this bearish factor has been priced in for now.

"The dominant factor over last couple of weeks was the collapse in energy prices, but I don't think sugar has fully priced in stockpiling. Its priced it in to some extent, but I think there's more to come," said Carlos Mera, analyst at Rabobank.

Brazilian sugar mills were quick to start cane crushing in the new center-south season, processing 3 million tonnes in the first half of March, 88% more than in the same period a year earlier.

Support and Resistance for sugar #11 lies at 11.10 cents and 11.84 cents/lb, respectively.

(Commodities Control Bureau)

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