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ICE raw sugar prices little changed as Oct contract expires

1 Oct 2022 9:01 am
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Mumbai, 1 OCT (Commoditiescontrol): ICE raw sugar futures closed stable on Friday as the market focused on the expiry of the October contract.

ICE October raw sugar contract expired on Friday little changed, at 18.42 cents per lb. December London white sugar fell $1.10, or 0.2%, at $528.70 a tonne.

Weakness in crude prices weighed on sugar as WTI crude Friday fell more than 1%. Weaker crude prices undercut ethanol prices and may prompt Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol, thus boosting sugar supplies.

Dealers said the market continued to derive support from short-term supply tightness with October trading at a sizeable premium to March.

Deliveries against the contract were at nearly 745,000 tonnes, significantly higher than around 222,250 tonnes against last year's October contract but well below the record 2.58 million tendered in 2020.

They noted that mills in Brazil were looking to use as much cane as possible to make sugar rather than biofuel ethanol, as sugar was currently more profitable.

Losses in sugar Friday were limited by a decline in Brazil's Center-South sugar output. Unica reported Tuesday that Center-South sugar output in the 2022/23 marketing year through mid-Sep was down 8.4% y/y to 24.634 MMT.

In a supportive factor, Conab, on August 19, 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.

This past 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.

A bearish factor for sugar was last Monday's projection from StoneX for Brazil Center-South 2023/24 sugar production to climb 5.7% on year to 35.2 MMT. StoneX also projects that global 2023/24 sugar production would climb 3% on year to 194.4 MMT on rising supplies from Brazil, India, and Thailand. StoneX predicts a 2022/23 global sugar surplus of 3.9 MMT.

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.

For Monday, support for October raw sugar is at 17.55 cents and 17.43 cents, with resistance at 17.85 cents and 18.03 cents.

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


       
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