Mumbai, 7 OCT (Commoditiescontrol): ICE raw sugar prices inched up on Thursday, extending the market's rebound from a two-month low, supported by gains in broader financial markets, with world stocks around two-week highs on Wednesday and oil rising after a fall in stocks in the U.S.
ICE March raw sugar contract settled 0.04 cent, or 0.2%, higher at 17.95 cents per lb. December London white sugar rose $1.50, or 0.3%, at $534.60 a tonne.
A rally in crude prices Thursday to a 3-week high underpinned sugar prices, dealers said. Higher crude prices benefit ethanol and may prompt Brazil's sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.
Dealers said the market was supported by gains in broader financial markets, with world stocks around two-week highs on Wednesday and oil rising after a fall in stocks in the U.S.
European Union sugar production is forecast to fall by 6.9% in the 2022/23 season to 15.5 million tonnes following a drop in planted area and a severe summer drought in many parts of the trading bloc, the European Commission said in a short-term outlook issued on Wednesday.
A bullish factor for sugar is a decline in Brazil's Center-South sugar output. Unica reported last Tuesday that Center-South sugar output in the 2022/23 marketing year through mid-Sep was down 8.4% on year to 24.634 MMT. Also, 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.
In a bearish factor, StoneX on Sep 18 projected that Brazil Center-South 2023/24 sugar production would 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.
Robust sugar exports from India are bearish for prices after India 2021/22 sugar exports jumped 57% on year to a record 11 MMT. The Indian Sugar Mills Association (ISMA) estimates that India's 2021/22 sugar production (Oct 1-Sep 30) rose 2.9% on year to 35.9 MMT.
On Friday, support for March sugar contract is at 18.11 cents and 17.75 cents with resistance at 18.66 cents and 18.85 cents.
(By Commoditiescontrol Bureau: +91-22-40015505)
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