Mumbai, 8 FEB (Commoditiescontrol): ICE raw sugar futures closed higher on Tuesday as a late wave of fund buying across the commodities and energy complex boosted prices. Last week, the sweetener accumulated gains on the back of reduced sugar output and smaller sugar exports from India.
March ICE raw sugar settled up 0.18 cent, or 0.9%, at 20.84 cents per lb, although the contract is remains distant from a six-year peak of 21.86 cents hit last week. March London white sugar rose $5.60, or 1%, at $555.20 a tonne.
Dealers said traders are feel comfortable adding back risk after last Friday's strong employment report shock. They are adding long positions ahead of Biden's optimistic messaging in tonight's State of the Union. However, the market was growing sceptical about official warnings that supply from India, the world's second largest exporter, will disappoint this season, especially as production has to date run ahead of last season, they added.
Meanwhile, a small delivery against March whites was now expected given the falls in open interest.
Analyst cautioned traders against creating fresh long position. They expect the market to consolidate in the short term after its recent strong advance, with technical indicators suggesting the market has become overbought.
The run-up has been fuelled by tight supplies and partly by suggestions that lower than expected production in India is likely to curb its exports.
India, the world's second-largest sugar exporter, is likely to produce 34 million tonnes of the sweetener in 2022/23, down 7% from the previous forecast, a leading trade body said.
Brazil's decision to end a tax exemption on imports of fuel ethanol could also potentially lead to more use of cane to produce the biofuel domestically at the expense of sugar.
A global sugar deficit of 1.01 million tonnes is projected for the 2023/24 season, ending a run of three successive surpluses, analyst Green Pool said.
Prospect of smaller sugar output in India is seen discouraging the government from allowing additional sugar exports is boosting prices. India's National Federation of Cooperative Sugar Factories projects that India's 2022/23 sugar production will fall 4.5% on year to 34.3 MMT.
India's Food Secretary Chopra said last Thursday that India would assess domestic demand before deciding whether to allow more sugar exports next month. India is the world's second-largest sugar exporter.
Sugar prices also have support from last Tuesday when Brazil's state-owned oil company Petrobras raised gasoline prices by more than 7% to distributors. Strength in gasoline is supportive of ethanol prices, and higher ethanol prices may prompt Brazil's sugar mills to boost ethanol production at the expense of sugar.
Brazil's center-south sugarcane crushing totalled only 440,000 tonnes in the first half of January, as just a few mills continue with operations in the between-harvests period, industry group Unica said.
Brazil is the biggest sugar producer in the world. Also, the India Sugar Mills Association (ISMA) reported last Tuesday that India's 2022/23 sugar production from Oct-Jan 15 rose 4% on year to 15.7 MMT. India is the world's second-largest sugar exporter.
Earlier this month, NY sugar posted a 2-1/2 month low on an improved sugar supply outlook. Unica reported on Jan 11 that Brazil's 2022/23 sugar production through December rose 4.4% on year to 33.462 MMT.
Speculators increased their bullish bets on raw sugar futures on ICE U.S. in the week to Jan. 17, data from the Commodity Futures Trading Commission (CFTC) showed on Friday.
For Wednesday, support for the March Cotton contract is at 20.54 cents and 20.25 cents, with resistance at 21.09 cents and 21.35 cents.
(By Commoditiescontrol Bureau: 09820130172)
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