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ICE Raw Sugar Hits Over 4.5 Months High on Output Concerns in Thailand, Fund Buying

1 Aug 2020 8:27 am
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Mumbai (Commodities Control) – Raw sugar futures on ICE climbed to over 4-1/2 month high on Friday supported by a diminishing outlook for production in Thailand and gains in many other dollar-denominated commodity markets driven partly by the weakness of the U.S. currency.

NY world sugar prices rallied sharply on fund buying and a technical breakout to a new 4-3/4 month high. Sugar prices also saw support from expectations for China and Indonesia to boost imports.

Sugar prices saw support from Friday's mild rally in September WTI crude oil prices, which was positive for Brazilian ethanol prices/production and negative for sugar production.

October raw sugar ​​settled up 0.53 cents, or 4.4%, at 12.64 cents per lb, the highest since March 10. October white sugar ​​settled up $13.40, or 3.6%, at $381.60 a tonne.


Dealers said drought was set to curtail production in Thailand, helping to at least partially offset a strong increase in output in Brazil.

"With less Thai raws becoming available early next year, the market looks substantially less crowded by the extra sugar from Brazil," Commonwealth Bank of Australia analyst Tobin Gorey said in a note.

A U.S-based broker said talks of strong Chinese buying also boosted prices, as well as positioning by funds.

Traders and analysts saw production in the key Centre-South region of Brazil rising sharply in 2020/21 leading to a global surplus of the sweetener.

The European Commission reported Thursday that EU Oct-Jul sugar exports slumped 54% y/y to a 3-year low of 600,000 MT, indicating the reduced availability of supplies from the EU.

Speculators increased their net long position in raw sugar on ICE Futures U.S. in the week to July 28 by 8,385 contracts to a total long of 70,470 contracts, data from the U.S. Commodity Futures Trading Commission (CFTC) showed on Friday.

Support and Resistance for sugar #11 lies at 11.88 cents and 13.10 cents per lb respectively.


       
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