Mumbai, 18 May (Commoditiescontrol): ICE sugar futures Tuesday closed near 1-month high, extending previous sessions gains, as fears of frost in Bazil supported the rally. The National Institute of Meteorology in Brazil said Monday that there's a risk of frost in sugarcane growing areas of Brazil until the end of this week.
July world sugar ended up by 32 cents (1.63 percent) to 20 cents per lb, and Aug London white sugar closed up by $5.60 (1.02 percent) to $554.80 a tonne.
Strength in the Brazilian real is supportive for sugar prices after the real Tuesday rallied to a 1-1/2 week high against the dollar. A stronger real discourages export selling from Brazil's sugar producers.
Dealers said that while sugar could pull back this week if the weather in Brazil moderates, it is seeing upward pressure from rising prices for energy, grains and fertiliser.
Higher energy and grains prices tend to lift the price of ethanol. This can tempt cane mills in top sugar producer Brazil to produce less of the sweetener and more of the biofuel. Brazilian cane mills are cancelling some sugar export contracts and diverting production to ethanol.
The outlook for bigger global sugar supplies is negative for prices. Green Pool Commodity Specialists on April 29 shifted its projection for the 2022/23 global sugar market to be in surplus by 1.41 MMT versus a January forecast of a 742,000 MT deficit.
The outlook for larger sugar crop sizes in India and Thailand is bearish for sugar prices. On April 15, the Indian Sugar Mills Association (ISMA) raised India's 2021/22 sugar production estimate to 35 MMT from 33.3 MMT, up 12.2 percent on year, and said sugar exports would jump to a record 9 MMT. India is the world's second-largest sugar producer.
Meanwhile, the Thailand Office of the Cane & Sugar Board reported on March 22 that Thailand's 2021/22 sugar production from Dec 7-Mar 19 was at 9.6 MMT, and the total Thailand 2021/222 sugar harvest Dec 7-Mar 31 may reach 10 MMT, a 3-year high. As a result, the Thailand Office of the Cane & Sugar Board expects Thailand to export 7 MMT of sugar this (2021/22) marketing year. Thailand is the world's second-largest sugar exporter.
Sugar #11 futures would find support and resistance at 19.63 and 20.30 cents, respectively.
(By Commoditiescontrol Bureau: +91-22-40015505)
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