ICE sugar steady after hitting 1-year low

Mumbai, 10 Aug (Commoditiescontrol): ICE raw sugar futures steadied on Tuesday as the market consolidated from its recent dip to a one-year low, with the upside limited by cautious sentiment in the wider financial markets ahead of key U.S. inflation data.

ICE October raw sugar settled up 0.02 cent, or 0.1%, at 17.98 cents per lb. October London white sugar fell $2.50, or 0.5%, at $542.60 a tonne after rising to $554.90 on Monday – the highest in nearly three weeks.

Dealers said funds have raised net short position and are more likely to cover at these price levels than extend their bearish bets.

The weather is mixed, with ample rains in top producers Brazil and India, but there are worries over excess heat and a lack of rains in Europe and Britain.

A lack of recent rain in several sugar-growing regions worldwide supports sugar prices. Maxar Technologies said last Wednesday that hot and dry conditions in France and Germany threaten to lower sugar beet yields in the European Union and that India's sugarcane around the Ganges River Basin received below-normal rainfall in June and July.

Sugar prices have recently been undercut as India said it would allow additional sugar exports. India's government last Friday confirmed that it would allow a further 1.2 MMT of sugar exports for the year ending September 30 to help India's sugar mills from defaulting on export contracts. That would be on top of the current quota of 10 MMT for a total of 11.2 MMT of sugar exports.

The outlook for larger sugar crop sizes in India and Thailand is bearish for sugar prices. On April 15, the ISMA raised India's 2021/22 sugar production estimate to 35 MMT from 33.3 MMT, up 12.2% on year, and said sugar exports would jump to a record 9 MMT. India is the world's second-largest sugar producer. The Indian Sugar Mills Association (ISMA) recently reported that India's 2021/22 sugar production from Oct 1-May 15 rose 14.4% on year to 34.88 MMT. Meanwhile, Thailand's Office of the Cane & Sugar Board estimated that Thailand would export 7 MMT of sugar this (2021/22) marketing year. Thailand is the world's second-largest sugar exporter.

Smaller Brazil sugar production is bullish for prices after Unica reported July 27 that Brazil 2022/23 Center-South sugar production through mid-July was 12.661 MMT, down 17.4% on year, with the sucrose content per ton of crushed sugar cane down 3.3% on year at 130.45 kg per ton.

A bearish factor for sugar was the projection from Conab on April 27 for Brazil 2022/23 sugar production to increase by 15% on year to 40.3 MMT as the crop recovers from the past season's adverse weather. Also, the USDA's FAS on April 22 projected Brazil's 2022/23 sugar production would climb 2.9% on year to 36.37 MMT and that 2022/23 Brazil sugar exports would increase by 3.7% on year to 26.6 MMT.

ICE October futures would find support at 17.80 cents and meet resistance near 18.12 cents.

(By Commoditiescontrol Bureau: +91-22-40015505)