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Sugar Prices Dip as Brazil's Rain Forecast Boosts Production Prospects

5 Nov 2024 9:08 am
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Mumbai, 05 Nov (Commoditiescontrol): Sugar prices fell on Monday, with New York sugar hitting a 1.5-week low and London sugar reaching its lowest point in 1.5 months, as forecasts for rainfall in Brazil’s Center-South weighed on the market. Climatempo, a weather forecasting agency, reported that rain is expected to continue over the next few days in Brazil’s main sugar-producing region, raising hopes for a stronger crop yield.

March raw sugar futures on ICE slipped by 0.14 cents or 0.63%, closing at 21.93 cents per pound. This decline follows a recent three-week high of 23 cents per pound last week, which capped a 3.2% weekly gain. Meanwhile, London’s December white sugar dropped by $2.50 or 0.45% to $555.50 per metric ton.

Analysts noted that an overly long position by funds in London sugar might accelerate any downturn if liquidation occurs. The latest Commitment of Traders (COT) report revealed that funds increased their net-long positions in London sugar to 42,804, the highest level recorded since 2011.

Traders are closely watching Brazil’s sugar output, as recent rains may slow cane-crushing in the short term but are expected to boost the outlook for the next crop season. Early October data from Brazilian industry group Unica showed an 8% rise in sugar output year-over-year to 2.443 million metric tons, with cumulative seasonal production up 1.9% at 35.591 million tons, among the highest production rates on record.

Concerns about global supply also remain, with Wilmar International warning of possible sugar shortages in early 2025 due to low stock levels and drought impacts on cane growth. Meanwhile, Brazil’s Center-South is expected to see more rain starting Friday, which could further improve soil moisture and support yields.

Adding to the global supply landscape, Brazil’s sugar exports rose 23% in September, contributing to inflationary pressures in food markets worldwide. McDougall Global View noted that Brazil’s sugar production mix, at a high 48.7%, could also impact market dynamics.

Technically, ICE raw sugar has support at 21.60 and 21.26 cents, with resistance at 22.25 and 22.56 cents per pound.

(By Commoditiescontrol Bureau: 09820130172)


       
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