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ICE sugar futures settle mixed; Traders await news on Indian exports

22 Sep 2022 8:11 am
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Mumbai, 22 Sep (Commoditiescontrol): ICE raw sugar futures steadied on Wednesday after rallying 3% in the previous session, as traders awaited news on Indian exports amid near-term supply tightness.

ICE October raw sugar ​settled up 0.03 cent, or 0.2%, at 18.22 cents per lb, extending the market's rebound from a seven-week low of 17.50 cents set on Monday. December London white sugar settled down $6.10, or 1.2%, at $521.60 a tonne.

India will announce a quota for sugar exports "very soon" for the new season beginning Oct. 1, Food Secretary Sudhanshu Pandey said. As per medie reports last week, India was set to allow exports of 5 million tonnes of sugar in the first tranche for the new marketing year.

Indian government officials have also been asking mills to produce more ethanol and less sugar, according to local media.

Dealers noted the increased premium for near-term sugar futures versus those further out . The premium indicates supplies are tight for now, though they are expected to ease during the 2022/23 season (October/September).

Sugar prices were under pressure most of the day Wednesday on the prospects for larger future sugar supplies. StoneX Monday projected that Brazil Center-South 2023/24 sugar production would climb 5.7% on year to 35.2 MMT. StoneX projected that global 2023/24 sugar production would climb 3% on year to 194.4 MMT on rising supplies from Brazil, India, and Thailand. StoneX also predicted a 2022/23 global sugar surplus of 3.9 MMT.

ICE raw sugar recovered from early losses Wednesday and moved slightly higher after the Brazilian real climbed to a 1-week high against the dollar. A stronger real discourages export selling from Brazil's sugar producers.

This summer's hot and dry weather in Europe, the world's third-largest sugar producer, caused smaller sugar beet yields and lower sugar production, which is bullish for sugar prices. Czarnikow Group predicts sugar output in the European Union (EU) and the UK should total 16.4 MMT this year, about 1 MMT lower than last year, which means the EU may have to import more sugar than usual.

Another supportive factor for sugar was the action by Conab on August 19 to cut its estimate for the 2022/23 Brazil sugar crop to 33.9 MMT from an April forecast of 40.3 MMT, citing lower plantings and falling sugar cane yields.

In a bearish factor, India's government, on August 5, 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.

A bearish factor for sugar was the projection from the USDA's FAS on April 22 for Brazil's 2022/23 sugar production to 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.

For Thursday, support for October raw sugar is at 17.67 cents and 17.52 cents, with resistance at 17.96 cents and 18.10 cents.

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

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