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ICE Sugar Prices Decline Amid Weak Brazilian Real and Increased Supply

23 May 2024 8:47 am
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Mumbai, 24 May (Commoditiescontrol): ICE sugar prices continued their downward trend on Wednesday, pressured by the weakening Brazilian real and a positive global supply outlook. The Brazilian real fell to a one-week low against the dollar, prompting increased export selling from Brazilian sugar producers.

The July raw sugar contract dropped by 0.33 cents, or 1.78%, closing at 18.23 cents per pound. This sustained the decline from last week's 18-month low of 17.95 cents, despite a 6% loss for the week. In London, the August ICE white sugar contract fell by $2.90, or 0.53%, to close at $541.50 per metric ton.

Dealers attributed the market's defensive position to the strong pace of cane crushing in Centre-South Brazil, with data from industry group UNICA expected next week to cover the first half of May. The bearish trend is further fueled by Brazil's robust sugar harvest. UNICA reported that production in Centre-South Brazil reached 1.84 million tons in the latter half of April, an 84.25% increase from the same period last year, aided by drier weather conditions.

Projections from StoneX and S&P Global Commodity Insights estimate Brazil's 2024/25 sugar production at 42.3 million tons, indicating significant growth. Globally, production shifts are also affecting the market. Datagro forecasts a modest global surplus of 1.62 million metric tons for the 2024/25 season, reversing the previous season's deficit due to recovering production in Thailand and increased output in China. Conversely, India's sugar production has decreased by 1.6% year-over-year as of April 30.

Speculators have increased their bearish bets on ICE U.S. raw sugar futures. The Commodity Futures Trading Commission (CFTC) reported that funds increased their net short position by 13,919 lots to 58,274 in the week ending May 14.

Traders are closely monitoring these developments, with technical support for the July sugar contract seen at 18.09 and 17.94 cents, and resistance at 18.49 and 18.74 cents. Given the rising production in Brazil and shifting global supply dynamics, sugar prices are expected to remain volatile.

(By Commoditiescontrol Bureau: 09820130172)

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