Mumbai, 16 Jul (Commoditiescontrol): ICE sugar futures rebounded from early losses on Monday, surging higher as concerns over below-normal monsoon rains in India triggered fears of reduced availability, prompting a wave of short-covering.
The October raw sugar contract on ICE jumped 2.92%, or 0.56 cents, closing at 19.76 cents per pound after hitting a 2.5-month high the previous week. Despite a nearly 5% decline over the week, the contract saw a significant recovery. Similarly, the August ICE white sugar contract in London surged $24.00, or 4.38%, to close at $571.60 per metric ton.
The rally in sugar prices was driven by reports of below-normal monsoon rains in India, the world's second-largest sugar producer. The Indian Meteorological Department reported that as of July 15, India received 287.7 mm of rain during the current monsoon season, down 2% from the long-term average of 294.2 mm.
Initially, sugar prices moved lower, with NY sugar posting a three-week low. This was due to robust sugar output in Brazil, the world's largest sugar producer. Unica reported that Brazil's sugar production for the 2024/25 crop year through June was up 15.7% year-on-year at 14.2 million metric tons (MMT). The percentage of Brazil's sugar cane crop crushed for sugar rose to 48.72% from 47.69% last year.
Throughout the week, sugar prices saw moderate declines, with London sugar hitting a one-week low on Friday. This was partly influenced by the Indian Sugar and Bio-energy Manufacturers Association's (ISMA) forecast of higher reserves, leading to a request for the government to allow surplus sugar exports. ISMA maintained India's 2023/24 sugar reserves at 9.1 MMT with a surplus of 3.6 MMT, urging the government to reconsider export restrictions. India extended its export restrictions from October 31 until further notice to ensure adequate domestic supplies. During the 2022/23 season, India permitted mills to export only 6.1 MMT of sugar, down from a record 11.1 MMT in the previous season.
Brazil exported 3.20 million tons of sugar in June, up from 2.87 million tons a year earlier. Persistent dry weather in Southeast Asia and Latin America, particularly in Brazil, has supported sugar prices. Additionally, a fungal disease affecting sugar crops in Uttar Pradesh, India, has contributed to firm prices.
Earlier in the week, sugar futures in both New York and London showed resilience, bolstered by India's decision to maintain export restrictions, stabilizing the global market. Traders responded to concerns over lower-than-expected global production levels by covering short positions, further boosting prices.
The Commodity Futures Trading Commission (CFTC) reported that speculators reduced their short positions in raw sugar on ICE U.S. by 12,547 lots to 35,813 lots. Analysts are closely monitoring technical support and resistance levels for the October sugar contracts, identifying key levels at 20.02/20.29 cents and 19.29/18.83 cents, respectively.
(By Commoditiescontrol Bureau: 09820130172)
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