Mumbai, 05 Dec (Commoditiescontrol): Sugar prices registered moderate declines on Wednesday but held above recent lows as supply concerns eased, tempering market sentiment.
March raw sugar futures on ICE dropped by 11 cents, or 0.51%, to settle at 21.26 cents per pound. London December white sugar futures also declined, closing $2.80 lower at $550.40 per metric ton. Earlier in the week, raw sugar prices had rebounded from a two-month low of 20.70 cents per pound.
Easing supply worries were a key factor in the market's bearish tone. On November 21, the International Sugar Organization (ISO) revised its 2024/25 global sugar deficit forecast down to 2.51 million metric tons (MMT) from an earlier projection of 3.58 MMT. Additionally, the ISO raised its 2023/24 global sugar surplus estimate to 1.31 MMT, up significantly from the 200,000 MT projected in August. These adjustments reflect improving global supply dynamics, adding downward pressure on prices.
Brazil's sugar market also weighed on prices. The Brazilian real recently hit a record low against the U.S. dollar, making exports more attractive for the country’s sugar producers. However, adverse weather conditions, including widespread rain forecasted in Center-South Brazil, are expected to bolster crop prospects for the next season. Analysts at Datagro project a significant recovery in Brazil’s sugar production for the 2025/26 season, forecasting output between 42-43.2 MMT.
Short-term production figures paint a contrasting picture. According to industry body Unica, sugar output in Brazil's Center-South region fell sharply in early November, with production dropping 59.2% year-on-year to 898,000 metric tons. Similarly, S&P Global reported a 55.5% year-on-year decline in production during the same period.
Globally, French sugar beet growers anticipate a 2.5% rise in production this year, further contributing to an improved supply outlook. Citi analysts, however, remain cautiously optimistic, maintaining a three-month price target of 24 cents per pound and a 12-month forecast of 25 cents.
From a technical perspective, sugar prices are finding support at 21.14-21.02 cents per pound, with resistance at 21.40-21.54 cents. Market participants are closely watching weather risks, Brazil’s production recovery, and ethanol demand dynamics as key drivers of future price movements. Volatility is expected to persist in the near term as traders assess these evolving factors.
(By Commoditiescontrol Bureau: 09820130172)
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