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ICE raw sugar recovers from over 2-week low

29 Nov 2022 8:13 am
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Mumbai, 29 NOV (Commoditiescontrol): ICE raw sugar futures closed higher in a late session recovering on Monday after hitting 2-1/2 week lows earlier as rare protests against China's strict zero-COVID curbs sparked worries over demand growth in the world's second-largest economy.

ICE March raw sugar settled up 0.05 cents, or 0.3% at 19.38 cents per lb, having earlier hit a low of 19.05 cents. The contract lost 3.6% last week.

March London white sugar fell $1.10, or 0.2%, at $528.60 a tonne.

Dealers noted sugar has come some way off its recent high above 20 cents, adding the current weak macro-economic signals could push it further towards 19 cents near term. They added the short-term market finds support from tight supplies until the Asian harvests progress.

Fitch Solutions raised its average sugar price forecast for 2023 to 19 cents, driven by a less-than-expected Indian sugar export quota

A rebound in crude prices Monday sparked short-covering in raw sugar.

Last Tuesday, Sugar prices garnered after the Thai Sugar Milliers 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.

The sweetener continues to garner 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.

On Monday, Sugar prices were pressured by Czarnikow's forecast that suggested 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.

Adding further pressure was a forecast from the Organization of Cane Producers Association in Brazil. It sees Brazil's sugar output in 2022/23 at 36.9 million metric tons due to favorable weather. Production would reach 37.2 million metric tons in 2023/24, it added.

Sugar prices were weighed down by the general worries about global commodity demand and the sell-off in Dec WTI crude oil prices during the last couple of sessions.

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.

Meanwhile, higher sugar output in India is bearish for prices. On Oct 24, the Indian Sugar Mills Association forecast 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.

On technical basis, Sugar prices are likely to consolidate here onward. It failed in its attempt to push through 21 cent mark, which will continue to act as a resistance.

For Tuesday, support for March sugar contract is at 19.14 cents and 18.89 cents with resistance at 19.54 cents and 19.69 cents.

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


       
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