Mumbai, 04 Dec (Commoditiescontrol): Sugar futures recovered on Tuesday, driven by a softer U.S. dollar and a 2% rise in crude oil prices, which spurred short covering in the sugar market.
March raw sugar futures on ICE settled at 21.37 cents per pound, bouncing back from a two-month low of 20.70 cents. Meanwhile, London December white sugar futures gained $5.50 or 1%, closing at $553.20 per metric ton.
Last week, New York raw sugar prices fell by 3.2%, influenced by currency fluctuations and updated global supply projections. A stronger dollar and improving global sugar supplies had weighed on prices earlier.
The International Sugar Organization (ISO) recently revised its global sugar balance sheet, projecting a reduced deficit of 2.51 million metric tons (MMT) for the 2024/25 season, down from an earlier forecast of 3.58 MMT. Additionally, the ISO increased its estimate for the 2023/24 global sugar surplus to 1.31 MMT, up from 200,000 metric tons in August.
In Brazil, the world’s largest sugar producer, sugar output in the Center-South region fell sharply. Early November production dropped 59.2% year-on-year to 898,000 metric tons, according to Unica. Similarly, S&P Global estimated a 55.5% year-on-year decline in the first half of November. Despite this, analysts at Datagro expect Brazil’s sugar output to recover significantly in the 2025/26 season, with production forecasted to rise to 42-43.2 million metric tons.
The Brazilian real’s recent weakness against the dollar has added bearish pressure, encouraging export activity among Brazil’s sugar producers. However, higher crude oil prices support sugar markets due to their influence on ethanol production, which competes with sugar for cane supplies.
Citi analysts remain cautiously optimistic, maintaining a three-month price target of 24 cents per pound and a 12-month forecast of 25 cents. Technical indicators suggest sugar prices face support levels at 21.10-20.84 cents per pound, with resistance at 21.61-21.86 cents.
Sugar markets are navigating a blend of bullish and bearish influences. While revised global supply projections and a weaker Brazilian real weigh on prices, weather risks and ethanol dynamics offer countering support. Volatility is expected to persist as traders assess Brazil’s production recovery, global weather conditions, and evolving demand trends.
(By Commoditiescontrol Bureau: 09820130172)
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