Mumbai, 5 Oct (Commoditiescontrol): Raw sugar futures ended lower on Friday, driven by a surge in the U.S. dollar that prompted traders to liquidate their long positions.
March raw sugar futures fell by 0.23 cents, or 0.99%, to settle at 23.01 cents per pound, though it still posted a weekly gain of 0.9%. London’s December white sugar futures also dropped, down $7.10, or 1.22%, to close at $576.90 per ton.
Sugar prices retreated from their one-week highs as the dollar index climbed to a seven-week high, making sugar more expensive for non-U.S. buyers. A large long position in London white sugar exacerbated the pressure, leading to long liquidation as prices fell.
The latest Commitment of Traders (COT) report showed that funds increased their net-long positions in London white sugar by 4,460 contracts in the week ending October 1, reaching a four-year high of 40,192 net-long positions. This heightened exposure raises the risk of further profit-taking if the market weakens.
September saw a rise in global sugar prices, which contributed to the largest jump in the United Nations' world food price index in 18 months. Brazil, a key sugar producer, exported 3.95 million tons of sugar during the month, a 23% increase year-on-year.
Meanwhile, rising oil prices due to escalating tensions in the Middle East are supporting ethanol production, which could prompt global mills to divert more cane toward ethanol instead of sugar, potentially reducing sugar supplies. In Brazil, where sugar supplies remain tight, consistent rainfall is needed to boost crop prospects.
In India, above-average rainfall is forecasted for October, following months of heavy rains. This could impact sugar production, with India expected to have about 2 million metric tons available for export next season. In Brazil, StoneX estimates a 2.5% increase in sugar production for the next season, but adverse weather could still affect cane crushing.
Russia, another key player, is expected to see a 10% drop in sugar production next season due to poor weather, though the country plans to export 600,000 tons after lifting its export ban.
Traders are now watching key technical levels for sugar, with support at 22.68/22.34 cents and resistance at 23.78/24.12 cents per pound. Market volatility is expected in the coming weeks, driven by weather patterns and geopolitical developments.
(By Commoditiescontrol Bureau: 09820130172)
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