Mumbai, 24 MAR (Commoditiescontrol): ICE raw sugar futures retreated lower on Thursday as dollar's strength dented the sweetner's appeal. However, the commodity continues to enjoy favourable fundamentals.
On Monday, StoneX Group have cut their 2022/23 global sugar surplus estimate to 2.5 MMT from a Jan forecast of 5 MMT, citing lower production in India due to excessive rain.
May ICE raw sugar lost 1.2% or 25 cents at 20.89 cents per lb. The asset hit a contract high of 21.33 cents last week. May London white sugar settled $6.10, or 1% lower at $597.80 a tonne.
Dealers said the fundamental picture remains more bullish than bearish with many unanswered questions on production from major producers India and Thailand.
Looking ahead though, trader Czarnikow said it expects sugar output in top producer Brazil will be 37.6 million tonnes this season, the second-highest on record.
Earlier this month, May NY sugar posted a contract high, and London sugar rose to a 5-3/4 month nearest-futures high on global weather concerns. The U.S. Climate Prediction Center said the La Nina weather pattern, which has affected weather patterns over the last three years, has ended and that an El Nino weather pattern has a 61% chance of developing in the second half of this year. If that El Nino pattern occurs, it could bring heavy rains to Brazil and drought to India, negatively impacting sugar crop production.
Sugar prices have underlying support from concern about smaller sugar production in India. The Indian Sugar Mills Association (ISMA) on Jan 31 cut its 2022/23 India sugar production estimate to 34 MMT from an Oct estimate of 36.5 MMT and cut its India 2022/23 sugar export estimate to 6.1 MMT from an Oct forecast of 9 MMT.
Also, the ISMA said that it sees India's sugar mills diverting 4.5-5.0 MMT of sugar to ethanol production in 2022/23. Last Friday, the ISMA reported that India's 2022/23 sugar output from Oct-Mar 15 fell 1.1% on year to 28.2 MMT. India is the world's second-largest sugar producer.
Since last Friday, sugar prices have been on the defensive when Unica reported that Brazil's 2022/23 sugar production through Oct-Feb rose 4.5% on year to 33.504 MMT. Also, Datagro last Wednesday projected that 2023/24 sugar production in Brazil's Center South would climb by 13.1% on year to 38.3 MMT. Brazil is the world's largest sugar producer.
An improving outlook for sugar production in Centre-South Brazil during upcoming 2023/24 has, however, helped to stall the advance.
Meanwhile, some mills were closing in Thailand slightly earlier than normal and production was likely to be lower than had been expected.
Sugar output in China's top growing region is set to be the lowest in six years, said Australia-based Green Pool Commodities on Thursday, as it revised down its estimate for production in one of the world's top producers.
Brazilian energy producer Raizen SA expects 48% of the cane crop in the Centre-South region to be used to produce sugar in the upcoming 2023/24 season. The forecast was slightly above a median forecast of 46% in a Reuters poll issued earlier this month.
Elsewhere, the French sugar beet crop area is set to fall to a 14-year low this year despite high prices, with farmers deterred by potential crop damage because of pesticide restrictions.
For Friday, support for the May Sugar contract is at 20.69 cents and 20.48 cents, with resistance at 21.22 cents and 21.54 cents.
(By Commoditiescontrol Bureau: 09820130172)
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