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ICE Raw Sugar Slips Under 11 Cents On Doubts Over Demand Recovery

23 May 2020 8:34 am
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Mumbai (Commodities Control) – Raw sugar futures on ICE closed down on Friday after hitting near two-month highs in the previous session, with oil prices sliding on rising U.S.-China tensions and doubts over the pace of a recovery in demand following the coronavirus crisis.

NY sugar prices were undercut by weakness in crude oil and the Brazilian real.

July raw sugar ​​settled down 0.05 cents, or 0.5%, at 10.93 cents per lb, after peaking at 11.32 cents on Thursday, its highest since late March. August white sugar ​​settled up $1.60, or 0.4%, at $366.90 a tonne.

Crude oil prices on Friday fell nearly 2%, which was negative for ethanol prices and may prompt Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol production, thus boosting sugar supplies.

"For most, prices past 11 cents made them somewhat uncomfortable. We largely agree but would (note) traders and consumers seem to have greater willingness to hold more inventory," said Commonwealth Bank of Australia.

Sugar market participants worried about potential disruption to Brazilian supplies are topping up inventories. Brazil is closing in on Russia to become the world's No. 2 COVID-19 hot spot behind the United States.

Ongoing weakness in the Brazilian real is bearish for sugar prices. The real on Friday fell 0.15% against the dollar as it attempts to stay above last Thursday's record low of 5.970 reals/USD.

Thursday's projections from the USDA's Foreign Agricultural Service (FAS) were negative for sugar prices since FAS is forecasting that global 2020/21 sugar production will climb 13.2% y/y to 188.1 MMT and that global ending stocks will fall by only 2.0% y/y to 43.55 MMT.

Support and Resistance for sugar #11 lies at 10.52 cents and 11.20 cents per lb, respectively.

(Commodities Control Bureau)


       
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