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ICE raw sugar futures end lower tracking slide in crude oil

24 Nov 2022 8:09 am
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Mumbai, 24 NOV (Commoditiescontrol): ICE raw sugar futures ended lower on Wednesday, pressured by the slump of more than 3% in crude oil prices. 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.

ICE March raw sugar settled down 0.19 cents, or 1.00% lower at 19.55 cents per lb, after having hit 20.48 cents last week. March London white sugar fell $2.30, or 0.4%, at $535.00 a tonne.

Traders will be focusing on today's production data release by the Brazil's industry group Unica for the 1st half of Nov.

Further, India is expected to allow a further 2-4 million tonnes of sugar exports in the 2022/23 season, a move which would leave total exports at 8-10 million tonnes and below last year's level.

Sugar prices garnered support Tuesday after the Thai Sugar Millers Corp said Thailand might push back the start of this year's sugar cane crushing season to early December from Nov 23 and cut its 2022/23 Thailand sugar cane output estimate to 105 MMT from 110 MMT, citing unfavorable weather conditions.

Sugar prices on Monday were pressured after Czarnikow predicted that Brazil's Center-South mills would produce 34.7 million metric tons of sugar in 2023-24 (Apr/Mar), up 7% on year and the highest in three years.

Sugar prices also saw pressure Monday after the Organization of Cane Producers Association in Brazil predicted Brazil's sugar output in 2022/23 at 36.9 million metric tons due to favorable weather and that production would reach 37.2 million metric tons in 2023/24.

Sugar prices on Monday were also pressured by general worries about global commodity demand and the -1% sell-off in Dec WTI crude oil prices. Lower 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.

Sugar prices continue to have support from concern about Asian sugar supplies after recent news that some Indian sugar mills reneged on contracts, forcing buyers to cover positions in the cash market.

In addition, the Indian Sugar Mills Association said last week that India's sugar production from Oct 1 to Nov 15 fell by 4.3% on year, suggesting disruptions in production. Sugar prices last week also saw support from reports that rain in Thailand has delayed the harvest by up to two weeks.

Unica recently reported that Brazil's Center-South sugar output in the 2022/23 marketing year through October was down 3.1% on year at 30.281 MMT.

Higher sugar output in India is bearish for prices. On Oct 24, the Indian Sugar Mills Association predicted that India's 2022/23 sugar production (Oct 1-Sep 30) would climb 2% on year to 36.5 MMT as Indian farmers boosted their planted cane acreage by 5.4% on year to 5.6 mln hectares.

In 2021/22, India's sugar production rose 2.9% on year to 35.8 MMT. India is the world's second-largest sugar producer. Also, robust sugar exports from India are bearish for prices after India 2021/22 sugar exports jumped 57% on year to a record 11 MMT.

In a bearish factor, the International Sugar Organization (ISO) last Tuesday projected that global 2022/23 sugar production would climb 5.5% on year to a record high of 182.1 MMT. Also, ISO projected that the 2022/23 global sugar market would be in a surplus of 6.2 MMT.

For Thursday, support for March sugar contract is at 19.41 cents and 19.26 cents with resistance at 19.74 cents and 19.92 cents.

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


       
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