MUMBAI, 09 Jan (Commoditiescontrol): Raw sugar prices on the Intercontinental Exchange (ICE) experienced marginal declines on Wednesday, weighed down by a firm U.S. dollar.
The March raw sugar contract closed at 19.24 cents per pound, marking a 0.21-cent or 1.08% drop. Similarly, London’s March white sugar futures eased by $3.90, or 0.77%, to settle at $503.70 per metric ton.
Traders noted that sugar prices remain range-bound, with support near 19.04 cents and resistance around 20 cents per pound. The market has shown signs of stabilization after sharp declines in late 2024, but analysts caution against expecting a sustained recovery. Improved rainfall in Brazil, a key producer, has boosted the outlook for its upcoming cane harvest, adding to downward price pressures.
Over the past three months, raw sugar in New York fell to a 3.5-month low, while London’s white sugar prices hit a 2.75-year low. Recent gains in sugar prices were partially fueled by a rally in crude oil, which reached a 2.5-month high. Higher crude oil prices typically encourage sugar mills to allocate more cane for ethanol production, tightening sugar supply. However, this dynamic was offset by a weaker Brazilian real, which incentivized sugar exports and eased supply concerns.
India’s sugar production fell significantly during the first quarter of the 2024/25 season. Between October and December, output dropped by 15.5% year-on-year to 9.54 million metric tons (MMT), according to the Indian Sugar and Bio-energy Manufacturers Association (ISMA). This steep decline has heightened expectations that India will maintain its export restrictions, potentially limiting global sugar availability.
Brazil’s Center-South region also reported a 5.1% year-on-year drop in sugar production, totaling 39.71 MMT by mid-December, due to fewer operational mills. However, favorable weather conditions are expected to improve Brazil’s 2025/26 crop, which could help ease global supply concerns.
Conversely, Thailand’s sugar output is projected to rise by 18% year-on-year to 10.35 MMT for the 2024/25 season. China has also recorded higher production levels, contributing to a more optimistic global supply outlook. Reflecting these trends, the International Sugar Organization (ISO) has revised its global sugar deficit forecast for the 2024/25 season to 2.51 MMT, down from a previous estimate of 3.58 MMT. For the 2023/24 season, the ISO increased its surplus projection to 1.31 MMT, citing improved supply conditions.
Sugar prices continue to exhibit volatility, with technical support identified at 19.09 and 18.95 cents per pound, and resistance levels at 19.46 and 19.69 cents. Market sentiment is expected to hinge on production trends in major sugar-producing nations, ethanol demand, and broader macroeconomic factors.
The global sugar market is navigating a complex landscape. Bearish factors, such as increased output in Thailand and China, are counterbalanced by bullish signals like declining production in India and Brazil and robust ethanol demand. In the coming months, traders will closely watch weather conditions, government policies, and economic indicators to anticipate the market's direction.
(By Commoditiescontrol Bureau; +91 98201 30172)
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