Mumbai, 14 Nov (Commoditiescontrol): Sugar prices continued their downward trend on Wednesday, with ICE sugar futures reaching a near two-month low, weighed down by a strengthening U.S. dollar, which hit a year-high. The firmer dollar makes dollar-priced commodities like sugar more expensive for international buyers, contributing to the price decline. In London, sugar futures saw steeper losses after falling below the critical 200-day moving average, triggering technical selling.
Despite reports from Brazil’s industry group, Unica, indicating a 24.3% drop in sugar output from the Center-South region for the second half of October—producing 1.785 million metric tons—overall production for the 2024/25 season is still slightly up by 0.3%, totaling 37 million metric tons.
On the trading front, ICE March raw sugar futures fell by 0.18 cents, or 0.84%, closing at 21.17 cents per pound, after touching a near two-month low of 20.86 cents during the session. Meanwhile, London’s December white sugar futures declined by $4.80, or 0.88%, settling at $538.20 per metric ton.
Market participants noted that the strength of the dollar was a major factor behind the price drop, although a diminished outlook for Brazil's 2025/26 sugar production, partly due to recent wildfires, provided some underlying support. Crude oil prices, which have been weakening, also impacted ethanol prices, potentially prompting Brazilian mills to shift more sugarcane towards sugar production, which could further increase global sugar supply.
In addition, Germany’s industry association has forecast higher refined sugar production from beet crops in the 2024/25 season, although crop diseases may affect yields. Brazil's anticipated sugar production for late October could be down by 28.3% year-on-year, potentially at 1.69 million tons, according to early reports from S&P Global Commodity Insights.
A forecast for increased rainfall in Brazil’s Center-South region has eased earlier drought concerns, supporting the expectation of a stronger sugarcane yield. However, this positive weather outlook has dampened market sentiment, as increased supply could weigh further on prices. A November 5 COT report from London also showed funds liquidating long positions, with record-high net-long holdings previously reported.
Global sugar output is expected to drop by 5 million metric tons, according to Green Pool Commodity Specialists, while Brazil's crop agency, Conab, has revised the Center-South production outlook to 42 million tons. Meanwhile, India is poised for a strong sugar crop, thanks to above-average monsoon rainfall, marking the highest level in four years, with rainfall recorded at 934.8 mm—7.6% above the long-term average. India’s changes to ethanol policy could also impact sugar export levels.
Looking ahead, ICE raw sugar futures are expected to face support at 20.84 and 20.50 cents per pound, with resistance around 21.53 and 21.88 cents. Analysts are closely monitoring Brazil's production mix, with current estimates showing that 48.7% of its sugarcane is being allocated to sugar production, as developments in both Brazil and India continue to influence market dynamics.
(By Commoditiescontrol Bureau: 09820130172)
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