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ICE Raw Sugar Settles Flat Supported By Rally In Energy Prices

4 Apr 2020 8:59 am
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Mumbai (Commodities Control) – Raw sugar futures on ICE rose on Friday, boosted by a surge in crude oil prices, with the market extending its rebound from a 1-1/2 year low set earlier in the week.

NY sugar posted modest gains Friday after crude prices jumped by more than 12%. Crude oil is climbing as OPEC+ has scheduled a virtual meeting for Monday. According to an OPEC delegate, a global cut in crude production of 10 million bpd is a realistic goal.

The surge in oil prices is bullish for ethanol prices and may encourage Brazil's sugar mills to divert more cane crushing toward ethanol production from sugar production, thus reducing sugar supplies.

May raw sugar closed up 0.02 cents, or 0.19%, to 10.31 cents per lb. The front month had fallen to a 1-1/2 year low of 10.02 cents on Wednesday. The contract was on track for a weekly loss of 5%. May white sugar rose ended $4.10, or 1.2%, after having touched $341.10 a tonne during the session.

Dealers said a rebound in energy markets could lessen the incentive for mills in Brazil to switch to using more cane to make sugar rather than biofuel ethanol, though a shift to increased production of the sweetener was still expected.

However persistent weakness in the Brazilian real against the dollar is a problem for sugar prices. The Real on Friday fell 1.18% against the dollar and posted a new record low of 5.3225 reals/USD.

Sugar prices were undercut this week when the CEO of the world's top sugar trader Alvean said that Brazil's Center-South sugar production for 2020/21 (Apr-Mar) may approach the record 36.06 MMT

Egypt's state-owned sugar buyer is seeking 100,000 tonnes of raw Brazilian sugar in an international tender.

Support and Resistance for Sugar #11 lies at 9.98 cents and 10.84 cents per lb, respectively.

(Commodities Control Bureau)

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