Mumbai, 19 Jul (Commoditiescontrol): ICE sugar futures extended their decline on Thursday, falling to a three-week low. This drop was influenced by negative carryover from Wednesday when Covrig Analytics forecasted a global sugar market surplus of 182,000 metric tons for 2024/25, a stark revision from the previous estimate of a 2.6 million metric ton deficit. Additionally, a weaker Brazilian real, which fell to a two-week low against the dollar, encouraged exporter selling from Brazil's sugar producers.
The October raw sugar contract on ICE dropped by 0.42 points, or 2.17%, closing at 18.94 cents per pound. This follows a recent 2.5-month high. Despite a nearly 5% decline over the week, the contract showed significant recovery. Similarly, the August ICE white sugar contract in London fell by $10.20, or 1.84%, closing at $545.50 per metric ton.
Dealers noted favorable weather conditions in Asia, leading some analysts to revise production numbers upward, including for India. Malaysia has requested India to ease export curbs on some agricultural goods such as rice and sugar.
Throughout the week, sugar prices experienced moderate declines, with London sugar hitting a one-week low on Friday. This was influenced by the Indian Sugar and Bio-energy Manufacturers Association's (ISMA) forecast of higher reserves, leading to a call for the government to permit surplus sugar exports. ISMA maintained India's 2023/24 sugar reserves at 9.1 million metric tons with a surplus of 3.6 million metric tons, urging the government to reconsider export restrictions. India extended its export restrictions from October 31 until further notice to ensure adequate domestic supplies. In the 2022/23 season, India allowed mills to export only 6.1 million metric tons of sugar, down from a record 11.1 million metric tons 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, especially 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 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 18.71/18.47 cents and 19.28/19.61 cents, respectively.
(By Commoditiescontrol Bureau: 09820130172)
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