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ICE sugar settles higher on softer dollar, positive macro indicators

12 Aug 2022 8:17 am
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Mumbai, 12 Aug (Commoditiescontrol): ICE sugar futures settled higher on Thursday helped by the dollars retreat while fading inflation fears aided price recovery.

ICE October raw sugar ​settled up 0.21 cent, or 1.1%, at 18.49 cents per lb, having hit a three-week high of 18.50. October London white sugar rose $5.40, or 1.0%, at $555.10 a tonne.

Dealers said sugar was gaining support from a weak dollar and an overall positive macro picture after U.S. inflation figures were softer than expected, suggesting less aggressive interest rate increases going forward.

The specs covered a portion of their shorts finally, said a trader.

UAE state investor Mubadala Investment Co and energy company Raizen are in the final round to acquire Brazilian ethanol joint venture BP Bunge Bioenergia, the world's third-largest sugarcane processor, one source with knowledge of the matter said.

A lack of recent rain in several sugar-growing regions worldwide is supportive of sugar prices. Maxar Technologies recently said 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 Thursday were undercut by a -1.20% sell-off in the Brazilian real versus the dollar, which encourages export sales by Brazil's sugar producers.

In a bearish factor, Unica reported Wednesday that Brazil's Center-South sugar output in the second half of July rose 8.4% on year to 3.302 MMT. However, Center-South crop output in the 2022/23 marketing year through the end of July was down 13.0% on year to 15.974 MMT.

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 18.28 cents and meet resistance near 18.60 cents.

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


       
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