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ICE raw sugar sets 2-month high on supply concerns

27 Sep 2022 9:28 am
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Mumbai, 27 Sep (Commoditiescontrol): ICE raw sugar futures rallied to two-month high on Monday, buoyed by short-term supply tightness. Also, fund short-covering ahead of Friday's expiration of the October sugar contract aided price recovery.

ICE October raw sugar closed 0.07 cent up, or 0.4%, at 18.35 cents per lb after touching a two-month high of 18.75 cents. December London white sugar rose 1.3% to $539.80 a tonne.

Dealers said the October contract, which expires on Friday, was trading at a premium to March of about 0.85 cent, lifted by a shortage of deliverable supplies. Rains in Brazil are said to be hampering harvesting as well.

However, sugar prices fell back from their best levels Monday after WTI crude dropped to an 8-1/2 month low, which undercuts ethanol prices and may prompt Brazil's sugar mills to divert more sugarcane crushing toward sugar production rather than ethanol, thus boosting sugar supplies.

The gloomy economic outlook, however, remains a bearish influence on further forward positions.

Another bearish factor for sugar prices Monday was the slump in the Brazilian real to a 2-month low against the dollar. The weaker real encourages export selling from Brazil's sugar producers.

The market was also keenly awaiting an announcement from India on the country's export policy. Food Secretary Sudhanshu Pandey said last week it would come "very soon".

"India's government still has not decided on 22/23 export tonnages, but industry is pushing hard for a full 8 million tonnes to be granted expediently," analysts Green Pool said in a report.

For Tuesday, support for October raw sugar is at 17.46 cents and 17.29 cents, with resistance at 17.86 cents and 18.09 cents.

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


       
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